Mumbai contributes 6 per cent to the country's GDP. It is not a surprise that lockdown of the financial capital comes at a huge economic cost. Economists are predicting the GDP growth rate in the country will be about 1-2 per cent and in worst case scenario, it may enter negative territory.
The Covid cases in Maharashtra are over 16,000 with 10,000 cases in Mumbai alone.
Nearly 70 per cent of Mumbai's contribution is service sector oriented. Analysts calculate that even if half of the services sector is shut, over Rs 16,000 crore would be lost per month.
Many sectors have been impacted by the lockdown, but one sector that has taken a big hit is realty. Real estate sector contributes 13 per cent to the country's GDP. And Mumbai's real estate is highly priced in the country. Last year, the market was Rs 12000 crore in terms of capital value.
Knight Frank, a real estate consultant, says prices are 5 per cent lower this year and 3 per cent estimated for 2021.
The impact can also be assessed by Maharashtra's revenue figures. Mumbai contributes 66 per cent to Maharashtra's GDP. In March 2019, the state collected Rs 42,000 crore. But in 2020 March, because of lockdown, the collection dipped to just Rs 17,000 crore- a drop of 60 per cent.
And MSME sector has also taken a big hit. Shrikant Battin has been into the handloom business for 30 years. He would have to bear 25 per cent losses this year, he said.
"I don't know how things will progress from here on. Everything is shut, even production. It will take 6-8 months to recover," he added.
Vishwas Utagi, independent economist suggests more needs to be done in terms of public and private partnership. "A good package is required from the centre, but because technology which is going to come up will definitely decide how much labour is required and ultimately it depends on what market is emerging what type of economic model is emerging in the post era."
The effects of lockdown are just emerging, with India's services activity index for April collapsing to a shocking 5.4, the worst in 14 years. Economists fear that this could just be the beginning.