Domestic rating agency Icra has estimated that the India’s Gross Domestic Product (GDP) might contract by as much as 20 per cent in the first quarter of current financial year (Q1FY21) and is expected to overcome some lost ground in the remainder of the year but still close FY21 down by up to 2 per cent after the government announced graded relaxations in the lockdown. The agency's earlier economic forecast was a range, according to which the GDP may either expand by 1 per cent or contract by 1 per cent in FY21.
After keeping the country under a 40-day lockdown to arrest the spread of coronavirus, the government extended the lockdown till May 17 with a slew of relaxations to the unaffected areas in order to kick-start economic activity.
It said while the graded relaxations announced by the government will permit the resumption of economic activity, the relatively stringent norms for major urban centres will result in the pace of activity remaining constrained. It said there is a likelihood of mismatches in labour availability and sectors, such as manufacturing, construction, trade, hotels and transport, will drag down growth.
