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Fitch Projected India’s Economy to Contract 10.5% in FY20-21 from -5%

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Fitch-projects-India's-economy-to-contract-10On September 8, 2020, in accordance with the September update of Global Economic Outlook (GEO), Fitch Ratings projected a 10.5% contraction of India’s economy in the FY2020-2021 from a contraction of 5% estimated earlier due to continued spread of the virus and imposition of shutdowns across the country that has disrupted economic activity. For FY21-22, Indian economy will grow 11%, while for 2022-23 growth will 6%.

  • In the first quarter of the current fiscal (Q1FY21) India’s gross domestic product (GDP) contracted by a massive 23.9%.
  • India also recorded one of the sharpest gross domestic product (GDP) contractions in the world in April-June, 2020.
  • Separately, India Ratings and Research, the India arm of Fitch Ratings India’s GDP growth forecast to (-) 11.8% from (-) 5.3% earlier.

Key Points:

-India’s GDP shrank by a staggering 24% year-on-year amid the imposition of one of the most stringent global nationwide lockdown.

-GDP should rebound strongly in 3Q20 (October-December) amid a re-opening of the economy, but signs of recovery have been sluggish and uneven.

-GDP growth is likely to be (-) 9.6% in July-September, (-) 4.8% in October-December and 4% in January-March quarter of FY21.

-India Ratings and Research revised India’s fiscal deficit forecast for India to 8.2% from 7.2%.

-Brazil, Russia and India now have some of the highest coronavirus caseloads in the world.

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According to The report titled, ’Implications of AI on the Indian Economy’ by National Association of Software and Services Companies (NASSCOM) along with the Indian Council for Research on International Economic Relations (ICRIER) and Google, a unit increase(measured as the ratio of AI to total sales) in Artificial Intelligence(AI) intensity can result in a 2.5% increase in India’s Gross Domestic Product(GDP) in the immediate term.

About Fitch Ratings:
Headquarter– New York, United States (US)
President– Ian Linnell