Business

Indian eco likely to rebound faster than predicted

NEW DELHI, NOV 19 (AGENCIES) | Publish Date: 11/19/2020 12:56:38 PM IST

India’s economy is likely to recover faster than predicted after the country’s GDP contracted almost 24 per cent in the first quarter of 2020-21, according to leading global agencies. Global rating agency Moody’s Investors Services and brokerage firm Barclays on Thursday lifted India’s growth estimates, following a sharp recovery in the country during the ongoing festive season.

While Moody’s had earlier predicted India’s annual growth forecast at minus 11.5 per cent, it has revised it to (-) 10.6 per cent. The revision came after the government’s latest Atmanirbhar Bharat 3.0 stimulus package.

The new measures that were announced amount to Rs 2.65 lakh crore. Moody’s praised the government’s measures and said they will help boost competitiveness in India’s manufacturing sector and help create more jobs. “We have revised our real, inflation-adjusted GDP forecast for fiscal 2020 (April 2020-March 2021) to a 10.6 percent contraction, from an 11.5 per cent drop previously,” Moody’s said.

For the next fiscal year, too, Moody’s has upped India’s projected growth forecast to 10.8 per cent, slightly more than the 10.6 per cent estimate it gave earlier.

”We forecast government debt to increase to 89.3 per cent of GDP in fiscal 2020 and decline to 87.5 per cent in fiscal 2021, from an already elevated 72.2 per cent in fiscal 2019,” Moody’s said. While the global rating agency is still concerned about consumer confidence in India, there has been significant improvement across several segments of the economy.

Brokerage firm Barclays has also lifted its 2021-22 growth forecast for India to 8.5 per cent from an earlier projection of 7 per cent. It now expects the country to return to normal faster than expected in view of strong performance by companies during the festive season and flattening of the Covid-19 curve.

While India has almost 90 lakh cases, the number of new daily cases has sharply fallen in the country with the exception of some places like Delhi. Additional measures are being taken in the national capital to curb the alarming spread of the virus. “The prospect of an effective vaccine in the near future and high seroprevalence of antibodies across the population support the case for a more durable economic recovery,” Barclays said in a recent note. The brokerage firm expects India’s GDP to contract by 6.4 per cent in the current fiscal year. Barclays also said that it expects India’s GDP to return to positive growth territory in the third quarter of 2020-21.

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