India's FY21 GDP now expected to contract by 7.8%, says Indian Ratings and Research

New Delhi, India Ratings and Research on Thursday narrowed the contraction in India's FY21 gross domestic product (GDP) growth to negative 7.8% from a negative 11.8%.

Accordingly, the ratings agency pointed out the easing of the Covid-19 headwinds and better-than-expected 2QFY21 GDP numbers as the reasons behind such a move.

"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," the ratings agency said in a report.

"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," the report further said.

According to Ind-Ra, GDP growth during 3QFY21 is expected to come in at negative 0.8% and 4QFY21 GDP growth to turn positive at 0.3% as against its earlier expectation it turning positive in 4QFY22.

Besides, the agency expects FY22 growth to be 9.6%, mainly due to the favourable or weak base of FY21.


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