FY21 GDP: India Ratings expects economic contraction to narrow to 7.8% from 11.8% forecast earlier

Although the headwinds emanating from challenges related to Covid-19 are unlikely to go away till mass vaccination becomes a reality, perhaps the economic agents and economic activities not only have learnt to live with it but are also adjusting swiftly to the post-Covid-19 world, Ind-Ra said in a statement

Kamalika Ghosh

December 24, 2020 / 01:46 PM IST

India Ratings has revised India's GDP growth forecast for FY21 further down to a contraction of 11.8 percent.

India Ratings and Research (Ind-Ra) revised its expectation for India's FY21 gross domestic product (GDP). It now expects contraction to narrow to 7.8 percent from 11.8 percent forecast earlier. The revision is due to the easing of the COVID-19 headwinds and better-than-expected second quarter FY21 GDP numbers.

"However, the question remains, how sustainable is the recovery witnessed in 2QFY21, as a significant part of the impetus came from the festival and pent-up demand," Ind-Ra said in a statement.

Although the headwinds emanating from Covid-19 related challenges are unlikely to go away till mass vaccination becomes a reality, perhaps the economic agents and economic activities not only have learnt to live with it but also are adjusting swiftly to the post-Covid-19 world, it said in a statement.

Ind-Ra now expects third quarter FY21 GDP growth to see a contraction of 0.8 percent and fourth quarter FY21 GDP growth to turn positive at 0.3 percent, against its earlier expectation of it turning positive in the fourth quarter of FY22.

"The agency expects FY22 growth to be 9.6 percent, mainly due to the favourable/weak base of FY21," the statement said.

COVID-19 Vaccine

Frequently Asked Questions

How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

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