IHS Markit has said that India’s Gross Domestic Product (GDP) growth is likely to recover in the second half of 2020 as the impact of the COVID-19 pandemic recedes, and GDP is projected to grow by 6.7 percent in the next financial year (FY22). It said the pandemic resulted in severe disruptions in industrial production and consumer spending in India during April and May. Therefore, it said the severe negative impact is expected to result in a significant contraction in GDP in the April-June quarter of 2020, resulting in a recession in the 2020-21 financial year with GDP expected to contract by 6.3 percent year-on-year.
Despite the negative short-term shocks from the pandemic, it said total foreign direct investment into India has remained buoyant. It noted that foreign direct investment by technology firms in the first seven months of 2020 has already reached around $17 billion, boosted by the $10 billion new investment announced by Google in mid-July. It added that Facebook, Amazon, and Foxconn are among the other global technology firms that have committed large new investments into India this year.
According to IHS Markit, an important positive factor for India is its large and fast-growing middle class, which is helping to drive consumer spending. It said total Indian consumer spending is forecast to grow by 42 percent between 2020 and 2025, measured in USD terms at constant prices. IHS Markit forecast India's consumption expenditure to double from $1.6 trillion in 2020 to $3.2 trillion by 2030, measured in constant prices, boosted by strong average annual GDP growth and rapidly rising per capita incomes for the country's fast-growing middle-class urban households.
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