The cost of the Covid-19 pandemic on the Indian economy is smaller than was projected, as the corporate sector managed to bring down costs and bolster balance sheets, according to Credit Suisse’s top equity strategist for India.

Previous analysis carried out by the Zurich-based financial institution predicted India’s economy would see a loss of 20 trillion rupee ($270 billion), but 75 percent of the factors considered in coming up with the figure didn’t have a lasting impact, and so the damage turned out to be significantly less than first thought.

“We call it ‘water under the bridge’. What people didn’t earn, they didn’t consume. So, the lasting implications were very low,” Neelkanth Mishra, Credit Suisse’s India strategist and co-head of equity strategy, Asia Pacific, said in an interview with BloombergQuint.

According to the him, the estimated loss has contracted to $200 billion, of which nearly $110 billion was borne by the government in terms of increased debt.

However, prospects are not so bright for non-corporate India, as the loss in personal income or wages has reportedly come to nearly $61 billion in total, leaving the poor with a worse balance sheet.

The remaining $27 billion is the loss of retained earnings and capital for companies. Severe cost-cutting measures introduced by corporate giants reportedly pushed the major negative impacts of the lockdown down to the smaller 30-40 percent of enterprises and individuals.

“From an inequality perspective that’s a disastrous outcome but from an economic momentum perspective that’s actually the best possible outcome,” Mishra said.

According to the analyst, the top 10-20 percent of Indian corporations, households and individuals, who spend the most, came out of the lockdown with a better balance sheet because their consumption was severely impacted while their income was secure. At the same time, the bottom 50 percent were less fortunate, as their income was severely affected while the consumption remained at the same basic level.

The extra savings that the top corporations, households and individuals have may boost investing and consuming activity and, hence, growth in the near future, Mishra said.

“That is the economic stimulus that has come through and therefore the lasting damage to the economy is much lower,” he said.

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