S&P Global Ratings on Tuesday raised India’s growth projection for the current financial year to (-)7.7 per cent from (-)9 per cent estimated earlier on rising demand and falling Covid-19 rates.
For the next financial year 2021-22, S&P projected growth to rebound to 10 per cent. Its revision in growth forecast for the current fiscal reflects a faster-than-expected recovery in the September quarter.
“Rising demand and falling infection rates have tempered our expectation of COVID-19’s hit on the Indian economy. S&P Global Ratings has revised real GDP growth to negative 7.7 per cent for the year ending March 2021, from negative 9 per cent previously,” S&P said in a statement.
A faster recovery keeps more of the economy’s supply side intact and can set India up for more prolonged above-average growth during the recovery phase, it added. India’s gross domestic product (GDP) fell 7.5 per cent in the July-September quarter, against a contraction of 23.9 per cent in the April-June quarter.
Earlier this month, Fitch Ratings also revised its growth forecast for India to (-)9.4 per cent, from (-)10.5 per cent, on signs of economic revival, while the Asian Development Bank said the economy is likely to contract 8 per cent as against the earlier forecast of 9 per cent contraction, on faster recovery. Last month, Moody’s upped India’s growth forecast to (-)10.6 per cent for the current financial year, from its earlier estimate of (-)11.5 per cent.
In the statement, S&P on Tuesday said India is learning to live with the virus, even though the coronavirus pandemic is far from defeated. However, the reported cases have fallen by more than half from peak levels, to about 40,000 per day. “It is no surprise that India is following the path of most economies across Asia-Pacific in experiencing a faster-than-expected recovery in manufacturing production,” S&P Global Ratings Asia-Pacific Chief Economist Shaun Roache said. Manufacturing output was about 3.5 per cent higher in October 2020 when compared to the year-ago period, while the output of consumerdurables rose by almost 18 per cent.