Moody's forecasts 10.6% contraction in India's economic growth in FY21

by Nidhi Bhati

Moody’s Investors Service has revised India’s GDP forecast for 2020-21. It now expects the economy to witness a 10.6 per cent contraction as compared to the 11.5 per cent contraction projected earlier in September 2020. For the financial year 2021-22, Moody’s has revised upwards India’s GDP growth forecast to 10.8 per cent from 10.6 per cent projected earlier. The global ratings agency further stated that the forecast has been revised by keeping in mind the latest stimulus that prioritises manufacturing and job creation and focuses on longer-term growth. However, it said consumer confidence in India continues to remain relatively weak amid a relentless rise in fresh coronavirus cases. Moody’s expects fiscal deficit to widen, reaching around 12 per cent of GDP, with some upside risk, in the current financial year and narrowing to about seven per cent of GDP over the medium term.