Goldman Sachs expects India's economy to shrink 45% on an annualised basis in the quarter to the end of June, and by 5% in the whole of the 2021 fiscal year running till next March, showing the economy contracting far more than previously expected.
"The deeper trough in our second quarter forecasts reflects the extremely poor economic data we have received so far for March and April, and the continued lockdown measures, which are among the most stringent across the world," the investment bank said in a note dated May 17.
Goldman had earlier projected the country's GDP to contract 20% in the second quarter and 0.4% for the financial year ended 2021.
Prime Minister Narendra Modi announced a nationwide lockdown from March 25 to contain the spread of the coronavirus, but Asia's third-largest economy has taken a huge hit as a result, with almost all economic activity coming to a grinding halt.
On Sunday, India extended the lockdown to May 31, allowing for some relaxations.
Finance Minister Nirmala Sitharaman outlined measures aimed at kickstarting the economy in a series of media briefings last week, but Goldman analysts said the reforms were more medium-term in nature, and they "do not expect these to have an immediate impact on reviving growth".
The investment bank said it expects an annualised rebound of 20% in the third quarter, but a gradual recovery of 14% and 6.5% respectively for the fourth quarter and first quarter of the next financial year.
Restarting the country's economy has continued to pose challenges, Goldman said, especially in containment "red zones", which account for about 45% of GDP.
Supply chains are improving, but are still operating at low levels, along with missing logistics and weak end-demand, according to the note.