Moody’s Investors Service on Thursday said the economy would contract 10.6 per cent this fiscal against its earlier forecast of 11.5 per cent contraction as the Centre’s stimulus measures announced last week would positively impact the economy.
The third stimulus package amounting to Rs 2.7 lakh crore prioritises manufacturing and job creation and focuses on longer-term growth, Moody’s said.
The measures aim to increase the competitiveness of the manufacturing sector, while supporting infrastructure investment, credit availability and the stressed sectors. They present potential upside to the current growth forecasts and a credit positive, Moody’s added.
“As countries have increasingly looked to greater diversification in their supply chains since the coronavirus pandemic, the timely introduction of these measures could boost India’s manufacturing industry, which contributed around 15 per cent of GDP in 2019,” Moody’s said, adding that widening of the scope of the credit guarantee scheme will boost credit flow and aid recovery.
“We have revised our real, inflation-adjusted GDP forecast for fiscal 2020 (April 2020-March 2021) to a 10.6 per cent contraction, from a 11.5 per cent drop previously,” Moody’s said.
For the next fiscal 2021-22, Moody’s projected India to grow at 10.8 per cent against the previous estimate of 10.6 per cent.
Q2 better: Icra
The contraction in the country’s gross domestic product (GDP) may have narrowed to 9.5 per cent in the second quarter of the current fiscal from 23.9 per cent in the April-June quarter, says a report by Icra.
The Central Statistics Office (CSO) will release the GDP data for the second quarter of 2020-21 on November 27.