GDP to contract 5% in IndiaIndia people ▼ | May 21, 2020
Domestic rating agency Icra Wednesday warned of a deep recession as it drastically lowered FY21 growth forecast for India to minus 5 per cent, citing the very modest fiscal support.
Though the government has been claiming that its economic stimulus package is worth 10 per cent of GDP or Rs 20.9 lakh crore, analysts have pegged it at just 0.8 to 1.2 per cent of the GDP.
But with the lockdown being extended to end-May, and expectation of substantial delays in getting the supply chains operational following the return of millions of migrant workers to their home states, Q1 degrowth will be deeper, and recovery will be shallower and more delayed than our earlier assessment, Icra said.
"Accordingly, we now expect FY21 growth to contract by a whopping 5 percent relative to our earlier expectation of 1-2 percent," its Chief Economist Aditi Nayar and Economist Aarzoo Pahwa said in a note ■