Here's The Mumbai Lockdown Economic Effects

Mumbai is contributing 6 per cent of GDP in the region. It's no wonder the financial resources lockout comes at a massive economic expense. Economists expect that the country's GDP growth rate will be about 1-2 per cent and, in the worst case scenario, it may hit negative territory.

In Maharashtra, the Covid cases are over 16,000 with 10,000 in Mumbai alone.

About 70 per cent of Mumbai's contribution is sector-oriented operation. Analysts say that even if half the services sector were shut down, more than Rs 16,000 crore every month will be lost.

The shutdown has affected many industries but one sector that has taken a major hit is realty. The real estate industry contributes to the country's GDP by 13 per cent. And in the region, real estate for Mumbai is highly priced. In terms of capital ization the industry was Rs 12000 crore last year.

Knight Frank, a real estate consultant, claims this year's rates are 5 per cent lower and forecast at 3 per cent by 2021.

The effect can also be measured using the revenue estimates from Maharashtra. Mumbai contributes 66 per cent to the GDP of Maharashtra. The state received 42,000 crore Rs in March 2019. Yet in March 2020, the collection fell to just Rs 17,000 crore due to lockdown – a decrease of 60 percent.

And the MSME sector has had a big hit too. For 30 years Shrikant Battin has been in the handloom market. He'd have to suffer losses of 25 per cent this year, he said.

"I don't know how things will go forward from here on. Everything is shut down, even production. It'll take 6-8 months to recover," he added.

Independent economist Vishwas Utagi says much needs to be done in terms of public and private partnerships. "The center needs a good package, but since the technology that will come up will certainly determine how much labor is needed and ultimately it depends on what kind of demand is emerging in the post-era economic model."

Now emerging are the consequences of lockout, with India's April services activity index crashing to a stunning 5.4, the lowest in 14 years. Economists are afraid this might be just the start.