India ratings estimate GDP growth at 1.9% this year, lowest in 29 years

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India Ratings and Research (Ind-Ra) on Monday revised its FY21 economic growth forecast for the country to 1.9 percent in the last 29 years, citing the COVID-19 pandemic and its subsequent lockdown. Gone. According to Ind-Ra, the Indian economy recorded a GDP growth rate of 1.1 percent in the 1991–92 fiscal year.
In a note on Monday, Ind-Ra revised its economic growth forecast for the country to 1.9 percent from its 3.6 percent forecast published on 30 March 2020.

Ind-Ra noted that its growth trajectory is based on the assumption that the partial lockdown will continue until mid-May 2020.

According to Ind-RA, “GDP may return to the fourth quarter of the fiscal year 2019-20, while the general economic activity during the second quarter (July-September) in the third quarter (October-December) of the current 2020-21 Is expected to resume. Of 2020-21) and festive demand during the third quarter (October-December) of the current financial year, “it said.

The rating agency, however, said that if the lockdown persists even after May-2020 and a gradual recovery occurs only by the end of June, then the GDP growth rate may have risen to 2.1 percent in the last 61 years. The lowest, and only the example of contraction from the sixth fiscal year 1957-58.

According to Ind-Ra, India’s GDP was negative 0.4 percent in 1957-58, negative 2.6 percent in 1965-66, it was negative 0.1 percent in 1966-67, negative 0.6 percent in 1972-73, and in 1979 -80 It was negative 5.2 percent.

The rating agency said that on the fiscal front, the fall in tax / non-tax revenue due to lockdown/growth slowdown coupled with the need to provide the fiscal stimulus would destabilize the financial arithmetic of both the union and state governments.

“Even without any significant fiscal stimulus, Ind-Ra expects the central government’s fiscal deficit to increase to 4.4 percent of GDP in 2020-21 (FY21 budget estimate: 3.5 percent of GDP) and 4 The trillion-rupee stimulus package will increase it to 6.0 percent of GDP.