Crisil has re-adjusted India’s fiscal 2021 real gross domestic product (GDP) forecast to contraction of 7.7% compared with a contraction of 9% forecast in September.
This was on account of a faster-than-expected revival in activity in the second quarter, that continued into the festive season. A consistent decline in overall COVID-19 case load also aided the revision.
“This is not to say that we read a conclusive recovery from here,” said Crisil. “On the contrary, some indicators point to a moderating momentum of late. The rise in inflation is also a nagging source of concern, constraining recovery.
“And, the pandemic is far from over. Our forecast for fiscal 2021, thus remains predicated on the pandemic’s trajectory and importantly, what the government does to stimulate a well-rounded recovery in the coming months,” it added.
“Inadequate fiscal spending, however, remains a constraint, while the possibility of a second wave of afflictions, uncertainty regarding availability of vaccine, and hiccups in global economic revival due to resurgence of cases, call for caution,” it said.
For fiscal 2022, its expects GDP growth to shoot up to 10% supported by a very weak base and some benefit as the global economy fares better and provides a lift to India’s exports.
“Services will take longer to recover than manufacturing. Beyond that, growth is seen averaging at 6.2% annually between fiscals 2023 and 2025. In this scenario, a catch-up to trend GDP is unlikely in the next three fiscals,” it said,
“We estimate the permanent loss on account of this at 12% in real GDP terms. Even with that, India is seen growing faster than the world beyond fiscal 2022,” it said.
Meanwhile, Brickwork Ratings has estimated the GDP contraction between 7 and 7.5% in FY21 from the previously estimated contraction of 9.5%.
“Based on the latest growth indicators and Q2 GDP numbers, we have revised upwards our GDP projections for FY21 at -7% to -7.5% from our earlier estimates of -9.5%. We continue to project that the contraction will remain in Q3, although at a lower rate of around -3% to -3.2%, and growth is most likely to turn positive in Q4,” Brickwork Ratings said.
