India GDP: Rating agencies forecast contraction of 8% to 11.8% in FY21

Though the government has started reopening the country in a phased manner and the economic activities have started to gather pace, rating agencies still see a major contraction in FY21 GDP growth

India's gross domestic product (GDP) contracted 23.9 percent in the April-June quarter due to the COVID-19 pandemic and subsequent lockdowns.

Though the government has started reopening the country in a phased manner and the economic activities have started to gather pace, rating agencies still see a major contraction in FY21 GDP growth.

> Rating agency Moody's has projected India's real GDP to contract by 11.5 percent in FY21, CNBC-TV18 reported.

It said the country's credit profile is increasingly constrained by low growth, high debt burden, and a weak financial system. It added that India's policy-making institutions have struggled to mitigate and contain the risks exacerbated by the COVID-19 pandemic. However, it expects India's economic growth to rebound to 10.6 percent in FY22 on the back of a strong base effect.

> Domestic rating agency CARE Ratings said the country's economy is likely to see a sharper contraction of 8-8.2 percent in the current financial year under the assumption of there being no fiscal stimulus from the government.

"The sharp fall in GDP growth in FY21 would, however, provide the cushion of a faster pace of growth in FY22 depending on the rate at which various sectors get back on track."

> Fitch Ratings has revised India's GDP outlook for FY21, stating that it will contract 10.5 percent, as against an earlier estimate of 5 percent contraction. The rating agency believes that the COVID-19-related recession was severe but also a short one.

> According to India Ratings and Research, the India GDP growth forecast for FY21 was revised further down to a contraction of 11.8 percent from the earlier contraction of 5.3 percent.