Moody’s: India’s growth projection at 9.6 per cent for 2021

Moody’s Investors Service has reduced India’s growth forecast to 9.6 per cent for 2021 from the earlier forecast of 13.9 per cent. According to it, growth will restrict to 7 % in 2022.

Highlights

Growth forecast was published in its report called ‘Macroeconomics India: Economic shocks from second COVID wave will not be as severe as last year’s’.

Key Findings of report

  • As per the report, high-frequency economic indicators shows that second wave of COVID-19 in India has hit hard the economy in April and May.
  • It highlights, as restrictions are now easing, economic activity in May will signify the trough.
  • Faster vaccination progress will be the key in restricting economic losses to June 2021.
  • It further states, virus resurgence has added uncertainty to India’s growth forecast for 2021. But it is likely that the economic damage will remain restricted for April-June quarter.

Which states have been hardest hit?

10 states in India have been hardest hit by second wave. They account for about 60 per cent of pre-pandemic level of India’s GDP. Maharashtra, Tamil Nadu, Uttar Pradesh and Karnataka are the four states that contributed largest shares among all states in financial year 2019-20.

Background

Indian economy witnessed the growth rate of 7.3 per cent in fiscal 2020-21 during the first wave of COVID against the growth rate of 4 per cent in 2019-20.

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