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Moody’s Sees India’s FY21 GDP Contraction at 10.6% After Centre Declares New Stimulus Measures

On Thursday, Moody’s Investor Service revised the contraction rate of India’s FY21 GDP to (- ) 10.6 percent from a previous estimate of (- ) 11.5 percent.

The revision comes a few days after the Centre declared new stimulus measures.

In addition, Moody’s revised the forecast for the following financial year ending March 2022.

It presently predicts an increase of 10.8 per cent from an ascent of 10.6 per cent, which was predicted previously.

Moody’s stated: “The latest measures (stimulus) aims to increase the competitiveness of India’s manufacturing sector and create jobs while supporting infrastructure investment, credit availability and stressed sectors. “As such, they present a potential upside to our current growth forecasts, a credit positive

As per the rating agency, consumer confidence in India stays comparatively low in the midst of a continued elevated number of daily new COVID-19 cases, “although this has come down from a peak in September”

India’s economy contracted a huge 23.9% in the June quarter, an outcome of the cross country lockdown to halt the spread of the COVID-19 pandemic.

Nonetheless, after the unlocking of the economy beginning June, India’s manufacturing PMI grew to its highest level in more than eight-and-half years to 56.8 in September flagging a quicker turnaround in industrial activity.

The International Monetary Fund has assessed India’s economy to contract 10.3% in FY21 while the Reserve Bank of India has estimated growth getting back to positive territory during October-December, quicker compacted to the prior projection of January-March quarter.

In the previous week, finance minister Nirmala Sitharaman said that a large group of economic indicators, including goods and services tax (GST) assortments, energy utilization, railway freight loading, bank credit flow and foreign direct investments, are a sign that a strong economic recovery was in progress.

Moody’s anticipates that fiscal deficit to enlarge, stretching around 12% of GDP, with some potential upside risk, in the current financial year and narrowing to around 7% of GDP over the medium term, and above the deficit of 6.5% of GDP in the year 2019.

Official information demonstrated that the Centre has exhausted 115% of its budgeted fiscal deficit of 2020-21 by the month of September as revenue receipts fell and capex shrank.

 

with IANSinpus