New Delhi, December 8
Fitch Ratings on Tuesday raised India’s GDP forecast to -9.4% in the current fiscal year to March 2021 (FY21) from a previously projected contraction of 10.5% after the economy staged a sharper rebound in the second quarter.
In its Global Economic Outlook, Fitch said the coronavirus recession has inflicted severe economic scarring and the country needs to repair balance sheets and increase caution about long-term planning.
“We now expect GDP to contract 9.4% in the fiscal year to end March 2021 (FY21) (+1.1 percentage point), followed by +11% growth (unchanged) and +6.3 per cent growth (+0.3pp) in the following years,” the rating agency said.
The projections compare to a GDP growth of 4.2% in 2019-20 (April 2019 to March 2020) fiscal and 6.7% annual expansion between 2015 and 2019. In September, Fitch had sharply lowered its forecast for India’s gross domestic product (GDP) to a contraction of 10.5% in current fiscal 2020-21 (FY21) versus its previous estimate of 5% contraction.
On Tuesday, Fitch said the Indian economy staged a sharper rebound in the July-September quarter from the coronavirus-induced recession. GDP fell 7.5% year-on-year, up from -23.9% in the April-June quarter.
“The rebound in activity was especially sharp in the manufacturing sector: output reached its pre-pandemic level in 3Q20 (July-September), and the manufacturing PMI hints at further gains,” it said adding that manufacturing is buoyed by strong demand for autos and pharmaceutical products, in particular.
“The outlook is brighter owing to an expected rollout of various vaccines in 2021. India has pre-ordered 1.6 billion doses including 500 million doses of the Oxford/AstraZeneca vaccine. Distribution should allow a faster-than-expected easing of social-distancing restrictions and boost sentiment,” it said. — PTI