Moody's Investors Service has revised upwards its Gross domestic product (GDP) forecasts for India to (-) 8.9 percent contraction in the 2020 calendar year, from its an earlier projection of -9.6 percent contraction, as the economy reflates after a long and strict nationwide lockdown but said the recovery is patchy. It also revised upwards India's GDP forecast for calendar year 2021 to 8.6 percent growth from an earlier projection of 8.1 percent expansion. The Indian economy had grown by 4.8 percent in 2019.
According to the report, India's economy had the biggest contraction, 24 percent year-over-year in the second quarter (April-June), as a result of a long and strict nationwide lockdown. It also said the country had a 69-day nationwide lockdown, which was followed by local and state-level restrictions to contain the spread of the pandemic. It added that restrictions have eased only slowly and in phases, and localised restrictions in containment zones remain and as a result, the recovery has been patchy.
The report further said a steady decline in new and active cases coronavirus cases since September, if maintained, should enable further easing of restrictions. It said ‘we, therefore, forecast a gradual improvement in economic activity over the coming quarters’. However, it said slow credit intermediation will hamper the pace of recovery because of an already weakened financial sector.