GDP to grow 2% in Q4: Icra
MUMBAI: Domestic rating agency Icra on Monday forecast a 2% uptick in growth during the March FY21 quarter, and 3 per cent from the gross valueadded perspective.
This would mean that the NSO projection of a double-dip contraction is avoided.
The agency has placed the full-year contraction at 8.45%.
Its chief economist Aditi Nayar expects the annualised GDP growth at 2% in the March quarter, up from 0.40% in the December quarter.
The agency has projected the GVA growth at 3% in Q4 of FY21, up from 1% in Q3, suggesting that the double-dip recession implied by the National Statistics Office (NSO) for Q4 is averted.
“We have forecast GDP growth to trail the GVA expansion in Q4, on account of the assessed impact of the backended release of subsidies by the government. Given the latter, we believe the trend in the GVA performance may be a more meaningful gauge of the economic recovery in Q4,” Nayar said.
Meanwhile, financial services provider Credit Suisse has slashed its nominal FY22 GDP growth prediction for India by 150-300 basis points (bps) to 13-14% due to the impact of the second wave of the pandemic on the economy and consumer sentiment. The lockdowns have only slightly impacted tax revenues, so better recovery is expected in the second half.
The overall impact of the pandemic restrictions on the GDP growth is expected to be about 150 bps in base case scenario. If the state-wide restrictions are prolonged and the impact increased to 300 bps, the nominal GDP growth in FY22 will still be about 13-14%, media reports said quoting equity analysts of Credit Suisse Premal Kamdar and Jitendra Gohil.
The pent-up demand is likely to boost recovery, which will be lower than the first wave. India will also see a rub-off effect of the global growth as developed countries could witness a quicker growth due to their vaccination programmes, the analysts added.
The localised lockdowns in various regions of India may hamper the movement of goods and supply chain bottlenecks could postpone the recovery of the industrial sector. However, pent-up demand will boost growth in the second half.
Moody’s Investors Service on Tuesday joined other rating agencies slashing its FY22 economic growth forecast for India from 13.7% estimated earlier to 9.3%, citing negative impact of the second wave of coronavirus pandemic. The rating agency cautioned that risks from deeper stresses in the economy and financial system could lead to a more severe and prolonged erosion in fiscal strength, exerting further pressure on the credit profile of Asia’s third largest economy.
“The imposition of lockdownlike measures will curb economic activity and could dampen market and consumer sentiment. However, we do not expect the impact to be as severe as during the first wave. Unlike the first wave where lockdowns were applied nationwide for several months, the second wave “micro-containment zone” measures are more localized, targeted and will likely be of shorter duration. Businesses and consumers have also grown more accustomed to operating under pandemic conditions,” it said.