New Delhi: India’s stringent lockdown norms have lasted longer than expected, said Fitch Ratings as it further reduced India’s GDP forecast to (-) 5 per cent from an earlier projected growth of 0.8 per cent for the current fiscal.Also Read - Budget 2022: IMF’s Gita Gopinath Expects India To Address Unequal Recovery, Focus On Healthcare, Education
However, for 2021-22 the economic growth forecast has been pegged at 9.5 per cent. Also Read - IMF Projects Global Economy To Grow At 4.4%, Cuts India's Economy Growth Forecast To 9% in FY 22
The massive cut was revealed in the latest Global Economic Outlook’s Crisis Update, which has been prepared in response to coronavirus-related lockdown extensions and incoming data flows. Also Read - Budget Glossary 2022: Key Economic Terms Decoded to Understand FM Nirmala Sitharaman's Speech
“The biggest forecast cut was to India where we now anticipate a 5 per cent decline in the current financial year (ending March 2021) in contrast to an earlier forecast of growth of 0.8 per cent,” the update report said.
“India has had a very stringent lockdown policy that has lasted a lot longer than initially expected and incoming economic activity data have been spectacularly weak.”
As per the update, Fitch also expects output in EM excluding China to fall by 4.5 per cent this year compared to a predicted fall of 1.9 per cent before.
“This large revision reflects the deterioration in the health crisis in many of the largest EMs over the past month or so, including in Brazil, India and Russia,” the update said.
Besides, Fitch’s GEO said the return to economic normality is likely to be a slow and bumpy process.
“An aggressive resurgence of the virus that necessitated greatly extended nationwide lockdowns would lead to an even worse outcome,” the GEO update report said.