How do you see India’s GDP growth for fiscal year 2020-21 after the latest ADB downgrade?
Answer
Answer
The Jun-20 quarter has displayed a lot of pressure at -23.9% and even the second quarter is likely to be under pressure. Now global agencies have been downgrading India’s potential GDP growth to around -10% for the full fiscal year 2020-21.
After Moody’s and Fitch, the latest to downgrade India’s full year GDP estimate is the Asian Development Bank or ADB. It has projected the Indian economy to shrink by 9% in fiscal 2020-21. Earlier, Moody’s had projected contraction of 11.5% and Fitch 10.5% for FY21.
ADB has specifically pointed out that India’s growth outlook was extremely vulnerable to a prolonged outbreak or a possible resurgence of cases. There has been a spurt in cases in rural areas and the average daily count has now gotten close to 1 lakh.
On the positive side, ADB has projected a strong 8% positive GDP growth for the next fiscal year. According to ADB, improved connectivity and a capital cycle revival could lead the recovery. The next quarter ended Sep-20 could be critical in terms of full-year cues.