In the latest development, India Ratings and Research have revised its FY21 gross domestic product (GDP) growth for India to 3.6% from 5.5%. The focal reason behind this is the spread of COVID-19 and the subsequent nation-wide lockdown imposed till April 14 2020, crippling most economic and commercial activities.
However, the revision is based on the assumption of lockdown continuing till end-April 2020 (full or partial) and the eventual restoration of economic activities May 2020 onwards.
Futhermore, taking the lockdown into consideration, India Ratings and Research have even revised the FY20 GDP forecast downward to 4.7% (9MFY20: 5.1%) from The National Statistical Office's advance estimate of 5.0%.
The rating agency expects the GDP growth to come in at 3.6% in 4Q FY20 and 2.3% in 1Q FY21. Average growth is forecast to decelerate to 2.8% in 1HFY21 (1HFY20: 5.3%) and recover to 4.3% in 2HFY21 (2HFY20: 4.2%), due to a) the base effect and b) a gradual recovery and restoration of supply chain, it said.
Some of the initial and visible impacts of the spread of COVID-19 on the Indian economy has been the disruption in the production of select manufacturing sectors due to the breakdown of supply chain, near collapse of the tourism, hospitality and aviation sectors and a rise in the work load of the healthcare sector.
Earlier on March 27, Influential Moody's Investors Service has slashed India's 2020 GDP growth projection from its earlier forecast of 5.3% to 2.5% amid the global Coronavirus pandemic.
“The governments of India (Baa2 negative) and South Africa (Baa3 negative) have announced 21-day lockdowns. We expect these measures to dampen economic growth in both countries this year. For India, we are now projecting growth rates of 2.5% in 2020 followed by 5.8% next year," Moody’s said in its Global Macro Outlook.
It expects the G-20 Economies to experience a shock in the first half of the year, which will have an effect on the rest of the year.
(With Inputs from Agencies)
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