The Indian economy is likely to recover faster than earlier predicted, according to leading global agencies. Brokerage firm Barclays and Global rating agency Moody’s Investor Services lifted India’s growth estimates on Thursday.
It is in the backdrop of a sharp recovery in the economy during the current festive season. India’s GDP had contracted by almost 24 per cent in the first quarter of 2020-21.
Moody’s has revised its annual growth forecast for India to minus 10.6 per cent from the previously predicted minus 11.5 per cent.
The revision follows the announcement of the Atmanirbhar Bharat 3.0 stimulus package by the government. The new measures brought up under the relief package amount to Rs. 2.65 lakh crore. Moody’s said that the measures will help boost competitiveness in India’s manufacturing sector and help create more jobs.
“We have revised our real, inflation-adjusted GDP forecast for fiscal 2020 (April 2020-March 2021) to a 10.6 per cent contraction, from an 11.5 per cent drop previously,” said Moody’s. It has upped the projected growth forecast for the Indian economy slightly to 10.8 per cent. Earlier, it had given a 10.6 per cent estimate.
There have been improvements in different segments of the economy but the rating agency is still concerned about consumer confidence.
Brokerage firm Barclays too expects the Indian economy to make a recovery and return to normal faster than predicted earlier. This is owing to the improved performance of the companies during the festival season and controlled situation when it comes to COVID-19 pandemic.
Barclays lifted its 2021-22 growth forecast for India from an earlier projection of 7 per cent to 8.5 per cent now. It predicts that India’s GDP will return to the positive trajectory by the third quarter of 2020-21 and expects India’s GDP to contract by 6.4 per cent in the current fiscal year.
“The prospect of an effective vaccine in the near future and high seroprevalence of antibodies across the population support the case for a more durable economic recovery,” noted Barclays.