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.