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India’s GDP growth to contract 5% in FY21:  S&P Global Ratings

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contract 5% in FY21On May 28, 2020, S&P Global Ratings (previously Standard & Poor’s), an American credit rating agency, has projected India’s GDP (Gross Domestic Product) growth for the current fiscal year FY 21( 2020-21) to contract by 5 % from 1.8 % growth projected in April 2020, due to the lockdown imposed for the prevention of the coronavirus (COVID-19) pandemic, which severely affected economic activity in the country.

Key Points:

i.However in the fiscal year FY 22 (2021-22) the growth is expected to pick up to 8.5 % as against the previous forecast of 7.5%.In the following fiscal(FY23), the GDP is projected to expand by 6.5 % and 6.6 % in FY24.

ii.According to S&P, the service sector, which provides the most employment, has been severely affected due to the two month lockdown & workers have been geographically displaced and will take time to recover.

iii.Earlier this week, rating agency Fitch & Crisil also forecast a negative growth of 5 % in the Indian economy. While, the Fitch Solutions (which is different from Fitch Ratings) predicts real GDP to contract by 4.5 % for the current fiscal FY2020-21 due to the decline in consumer spending & widespread economic uncertainties.

About S&P Global Ratings:
Headquarters– New York, U.S.
President– John Berisford
Parent– S&P Global