Global ratings agency Moody’s expects India’s economy to grow by 13.7% in 2021-22, higher than its previous estimate of 10.8% expansion as economic activity gathers pace. “Our current expectation is that in the current fiscal ending March 2021, the economy would contract 7%, lower than our previous estimate of 10.6%. We expect a rebound of 13.7% growth in the next fiscal on normalisation of activity and base effects. This is higher than the previous growth forecast of 10.8%,” Gene Fang, a Moody’s associate managing director told a virtual briefing.
The Indian economy has scripted a smart recovery since the lifting of one of the strictest lockdowns and most economists expect it too get back into positive territory in the third or the fourth quarter after a record slump of 23.9% in the June quarter. The country’s statistics office will publish GDP data for the October-December quarter soon.
Most agencies, economists expect the Indian economy to post strong growth in 2021-22 fiscal year. The IMF has forecast an11.5% growth rate for India in 2021-22, making it the only major economy in the world to post a double-digit growth and regaining the tag of the fastest growing major economy in the world from China.
Moody’s also said that India’s weak fiscal position will remain a key credit challenge in 2021. The agency is of the view that the central government’s fiscal deficit for fiscal 2021 and fiscal 2022 should be lower than projected, supported by stronger revenue generation in the fourth quarter of fiscal 2021 and higher nominal GDP growth in fiscal 2022.