India: Intensified efforts, indeterminate impact – HSBC

India’s 21-day lockdown is seen as an extraordinary move with substantial economic costs attached to it, but it has been deemed necessary by the government to limit the spread of coronavirus and avert a large-scale health crisis, per HSBC.

Key quotes

“A shutdown of this magnitude is seen as an extraordinary move with substantial economic costs attached to it, but necessary to limit the community spread of the virus and avert a large-scale public health crisis.”

“Even after the lockdown period ends, the 'fear factor' may still result in below-normal activity for a few more months, as there will likely be a lingering impact of COVID-19 related precautions on both private consumption and corporate capex.”

“We expect the RBI (and the government) to not lift their foot off the accelerator until the economy begins to revive.”

“The sharp fall in crude prices should lower India’s import bill and aid its current account, although oil prices are coming off their lows as talks between Saudi Arabia and Russia advance.”