02:10 GMT28 July 2021
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    New Delhi: Even before the Covid-19 pandemic hit, the Indian economy was slowing down due to the combined impact of the US-China trade war and the domestic crisis in financial markets. From over 8 percent growth in early 2018, India’s Gross Domestic Product fell to just 3.1 percent in January-March 2020 .   

    Global investment bank Citi has revised India's gross domestic product growth forecast downwards for the financial year 2020-21 (April 2020-March 2021). From a fall of 3.5% projected earlier, the bank now says that the country is likely to see the economy contract by 6 percent in the current financial year.

    Citi says the downward revision in India’s growth projection is mainly because of the downward revision of growth projections of the first quarter of the current financial year (April - June 2020).

    In its first quarter projections, Citi is revising India’s growth projections to -21 percent compared with -16 per cent previously. “The supply side shock has persisted longer than our expectations. Consumer and business sentiment may remain depressed in even in some part of second quarter (July- September)", it says.

    Citi adds that year-on-year growth in the second quarter could be around -3.9 percent but may improve to 0.4 percent in October – December and January – March 2021. “Underestimation of damage” and “delay in flattening the curve” are the key downside risks, it says.

    Ratings agencies and banks have projected a deep recession in India for the financial year 2020-21.

    Nomura, Goldman Sachs, and Fitch Ratings forecast that Indian growth will contract by 5 percent in 2020-21.

    Nomura predicts that April – June 2020 will see a contraction of 25 percent. The Japanese investment bank adds that India is unlikely to achieve pre-pandemic levels of growth for the next three years.


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