Fitch sees India GDP growth at 9.5% this fiscal, flags downside risks
SAYS PERCEPTION THAT PM MODI’S ADMINISTRATION MISMANAGED THE CRISIS TO WEIGH SOMEWHAT
India's GDP is expected to grow 9.5% this financial year, Fitch Solutions has said, adding that there are downside risks to the forecast due to the surge in COVID-19 cases and extension and expansion of localised lockdowns. The agency's forecast is 100 basis points lower than the Reserve Bank of India's projection for the year.
Fitch Solutions said the economic impact of the second wave of the COVID-19 pandemic is likely to be less severe than that in AprJun 2020 despite at least 11 states and Union territories imposing several restrictions.
"While containment measures
Credit Suisse has lowered its real GDP growth forecast for India to around 8.5-9%, citing disruptions due to the raging Covid wave that is likely to shave 100-150 basis points growth
will weigh on India's ongoing economic recovery, the localised nature of restrictions mean that the actual impact is likely to be much less severe relative to first quarter of 2020-21 (Apr-Mar)," it said.
The second wave of the COVID19 pandemic has ravaged the country, with many cities facing acute shortage of hospital beds, oxygen, and life-saving drugs. India reported 412,262 new cases today, the world's highest surge in a single day since the outbreak of the pandemic. India has so far reported 21.1 mln cases, the secondhighest in the world after the US. The current situation has led to severe criticism of the Narendra Modi government over its handling of the pandemic.
"We believe that the perception that Prime Minister Narendra Modi's administration has considerably mismanaged the COVID-19 crisis will weigh on his and the Bharatiya Janata Party's popularity somewhat," Fitch Solutions said.
"For now, however, we are cautious against concluding that the BJP's support has weakened across the country, given Modi's strong personality-led support across the country, which we believe can still sustain through this humanitarian crisis," it added. The agency said the trajectory of the pandemic would depend on the vaccination programme and the success of the restrictions.