Rating firms rework their India FY21 GDP forecasts with sharper contraction

Impact on wages to severely dent consumption and decelerate recovery, says India Ratings

Global and domestic rating agencies have sharply cut their forecast for India’s economic growth this fiscal year, after the official data showed a sharper-than-expected GDP contraction in the June quarter and sluggish recovery in indicators thereafter.

Fitch now expects India’s GDP to contract 10.5 per cent in FY21, compared to its earlier estimate of 5 per cent. India Ratings, its wholly-owned Indian subsidiary, predicts a sharper fall of 11.8 per cent in real GDP.

Goldman Sachs, which had earlier estimated an 11.8 per cent contraction, has now estimated it at 14.8 per cent.

India’s real GDP contracted by a record 24 per cent