Howdy, India?


You know what’s good about COVID-19? It has forced all of us to ground, and isolate, ourselves. Unlike whole days spent in interminable meetings and a persistent sense of constantly falling behind on the to-do list, we are getting time to stop and think about what is really going on in our world.


Safe to say, there’s almost nothing more of medium- or long-term concern to us than the economy. It creates the demand and supply for goods and services which creates the opportunities which keep all of us in our jobs and businesses. When our economy does well, we thrive and our lifestyles improve. And when it doesn’t, the vice versa kicks in, often to debilitating effect.


This, then, is a contemplation, in very broad, quite imprecise, terms, about where our Indian economy is and what it might look like when we are halfway through the third decade of the century, in 2025.




  1. Our GDP is $250 billion per month or $10 billion per day (25 day working month).

  2. It looks likely that COVID-19 is going to be with us at least for another month.

  3. Given the restrictions already in place, and further strictures which are bound to follow, we should expect at least a 5% impairment of the GDP run rate until April end. In other words, if the expected GDP for the 6 weeks from now to April end was $375 billion on a steady state basis, it will now come in at $356 billion. Assuming that India bounces back instantly and the remaining 11 months of Fiscal 20-21 deliver $250 billion per month, India will wrap up 20-21 with a GDP of $2.99 trillion.

  4. Now the Rupee slipped from 69 to the USD in April 19 to 73 to the USD right now, a 5.6% depreciation. Let's assume that it erodes only 5% during Fiscal 20-21. That will leave the Rupee at about 77 to the USD a year hence.

  5. Adjusted for this depreciated Rupee, the GDP slips to $2.84 trillion for 20-21, a hard fall of 16% in USD terms.

  6. Assuming that our Fiscal 24-25 goalpost remains unchanged at $5 trillion, India's GDP will have to grow at >15.2% in constant or >20% at current terms for these 4 years.

  7. The official growth rate right now is 4%. It needs to quadruple to give the economy a fighting chance of making the goal.

  8. Put differently, India needs to grow her GDP as much in 3 months as it is currently doing in the year.

  9. Capital formation, particularly by the private sector, is at a standstill. Banks had little risk appetite; it's vanished post Yes Bank. The equity market is unlikely to shake off the Coronavirus before Wall Street. Don't hold your breath for animal spirits there.


Let me give you a sense of how India’s stock markets are evaluating the economy right now. From Monday, March 9 to Monday, March 16, the Sensex has dropped 13%, from 36,101 to 31,394. In the meantime, the NIFTY has dropped from 10,990 to 9,197 in the same period, a fall of 16%. And as markets opened this morning, there was more blood on the dance floor. Buckle up and soak in the lovely view. These are the "good times", which you are going to remember, wistfully, in 2025.


(Paritosh Joshi is a media veteran)


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