Moody's projects India's GDP to grow by 12 per cent

American business and financial services company Moody's Analytics has projected India's GDP to grow by 12% in 2021. In an earlier estimate last November, it had said India’s GDP will grow at 9% in the calendar year.In an updated projection released it said India’s near-term prospects have turned more favourable following a stronger than expected December quarter, when GDP grew by 0.4% over the year following a 7.5% contraction in the September quarter. Domestic and external demand has been on the mend since the easing of restrictions, which has led to improved manufacturing output in recent months.

Battered by the coronavirus pandemic, Indian economy is officially projected to contract 8% in FY21, in its worst show in more than four decades. However, most professional forecasters have projected double-digit growth for India in FY22, considered mostly a statistical rebound than a V-shaped recovery.Last week, the Organisation for Economic Co-operation and Development OECD said the Indian economy is expected to grow 12.6% in FY22, the highest among G20 countries.Earlier this month, Moody’s Investors Service, which operates independently of its sister organization Moody’s Analytics, had projected the Indian economy to grow 13.7% in FY22.

Moody’s Analytics said it expects private consumption and non-residential investment to pick up in the next few quarters and strengthen domestic demand revival in 2021.However, a key risk to recovery in 2021 remains a strengthening second wave of covid-19, it said. The good news is that the resurgence appears to be limited to just a few states, which should increase the chances of containing the spread at an early stage, the report added.