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Ind–
Ra) on Monday revised its FY21 economic growth forecast for the country further down to 1.9 per cent, lowest in the last 29 years, citing the COVID-19 pandemic and the subsequent lockdown.
According to
Ind–
Ra, Indian economy had registered a GDP growth of 1.1 per cent in financial year 1991-92.
In a note on Monday,
Ind–
Ra revised its economic growth estimate for the country from its forecast of 3.6 per cent published on March 30, 2020 to to 1.9 per cent.
Ind–
Ra, noted that its growth projection is based on the assumption that the partial lockdown will continue till mid-May 2020.
According to
Ind–
Ra, “GDP may come back to the fourth quarter of 2019-20 fiscal level only by the third quarter (October-December) of current 2020-21 fiscal anticipating resumption of normal economic activities during second quarter (July-September) of 2020-21 and festive demand during third quarter of current fiscal (October-December),” it said.
The rating agency, however added that if the lockdown continues beyond mid-May 2020, and a gradual recovery takes root only from June-end, GDP growth may slip further to negative 2.1 per cent, lowest in the last 41 years, and only the sixth instance of contraction since fiscal year 1957-58.
According to
Ind–
Ra, India’s GDP in 1957-58 was negative 0.4 per cent, in 1965-66 it was negative 2.6 per cent, in 1966-67 it was negative 0.1 per cent, in 1972-73 it was negative 0.6 per cent, and in 1979-80 it was negative 5.2 per cent.
For 2020-21,
Ind–
Ra expects retail inflation at 3.6 per cent.
The rating agency said on the fiscal front, the dip in tax/non tax revenue due to the lockdown/growth slowdown coupled with the need to provide fiscal stimulus will destabilise the fiscal arithmetic of both union and state governments.
“Even without any significant fiscal stimulus
Ind–
Ra expects the fiscal deficit of the union government to escalate to 4.4 per cent per cent of GDP in 2020-21 fiscal (FY21 Budget Estimate: 3.5 per cent of GDP) and a stimulus package of Rs 4 trillion would push it to 6.0 per cent of GDP,” it said.
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