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Moody’s Analytics sees India’s GDP growth at 12% in 2021

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India's economy may grow at 12%Moody’s Analytics, a subsidiary of Moody’s Corporation, predicts India’s GDP to grow by 12 % in 2021 following a contraction of 7.1%(-7.1%) in 2020, and in an earlier estimate last November, it had said India’s GDP will grow at 9% in the calendar year 2021.

India’s Growth forecast by Moody’s Analytics:

  • Domestic and external demand has increased and leads to improved manufacturing output in recent months as the restrictions are eased.
  • Private consumption and non-residential investments also will pick up over the next few quarters and strengthen the demand in growth thus they saw real GDP growth of 12% in the 2021 calendar year.

GDP growth & Comparison: 

  • GDP is growing by 4% above pre-COVID-19 levels (March 2020-March 2021) or equivalently by 5.7% above the GDP level (December 2020-December 2021).
  • GDP growth for the December quarter of 0.4 % with a 7.5% contraction in the previous quarter favored India’s near-term prospects.

Analysis on Other Economic Indicators:

  • Benchmark repurchase rate: No additional rate cuts are expected this year other than the existing benchmark repurchase rate of 4%.
  • Fiscal deficit: It expects that the budget for fiscal 2021-2022 may lead to an annual fiscal deficit of nearly 7% of GDP.
  • Expenditure: It included additional expenditure on infrastructure development, and the associated benefits in the form of employment creation.
  • Inflation: Food-price or fuel-driven core inflation is expected.

NoteHerd immunity is a resistance to the spread of an infectious disease within a population usually 50% to 90% of a population needs immunity to achieve herd immunity.

  • Moody’s reported that most of the economies will not to return to pre-pandemic activity levels until 2022.

Recent Related News:

Fitch in its report titled, ‘India Set for Slow Medium-Term Recovery’ has projected that India’s Gross Domestic Product (GDP) will expand by 11% in 2021-22 in contrary to the down gradation by 9.4%(-9.4%) in the FY21 fiscal (April 2020 – March 2021).

About Moody’s Analytics:

Establishment – 2008
Headquarters – United States
President – Stephen Tulenko