FY21 GDP: Moody’s revises contraction forecast to 11.5%

India’s real GDP contracted by 23.9 per cent year-on-year in the April-June 2020 quarter, registering the economic impact of the nationwide lockdown measures which were in place from late March till a phased lifting of restrictions began in June. “The collapse in GDP was one of the sharpest among all major G-20 economies,” Moody’s said, adding a rating upgrade is unlikely in the near future.

“However, we would change the outlook on India’s rating to stable if economic developments and policy actions were to raise confidence that real and nominal growth will rise to sustainably higher rates than we project,” ithe rating agency said.

Moody’s said the sharp fall in growth will result in materially weaker government revenue. Combined with increased fiscal expenditure in response to the Covid-19 outbreak, this will contribute to a wider general government fiscal deficit, which Moody’s expects to reach 12.0 per cent of GDP in FY20.