India Ratings expects FY21 GDP Growth to be the Lowest in 29 Years

India Ratings recently revised its economic growth estimate for the country to 1.9%- the lowest in nearly 3 decades.

Recent Forecasts

India Ratings has revised its prediction for the GDP growth of India from 3.6% in March to 1.9% for this fiscal year. This is the lowest in 29 years. The last time India saw such low GDP growth was in FY1992 with 1.1%. If the lockdown were to continue beyond mid-May, the Ind-Ra predicts that FY21 will see a 41 year low in GDP growth.

Fiscal Deficit Predictions

The centre had originally targeted a fiscal deficit of 3.5% of GDP for FY21. However, Ind-Ra predicts that, in the absence of stimulus measures, the fiscal deficit for FY21 would reach 4.4%. But a package of 4 trillion INR would push the deficit to 6% of GDP.

Inflation Prediction

The India Ratings predictions expect the inflation to drop from 7.59% in January to 3.6% in FY21. This prediction is based on reports of:

• Adequate buffer stock of cereals
• Good harvest from rabi season
• Record drop in crude oil prices

lower pricing power of firms for reduced inflation