Mass GDP Downgrade: All You Need To Know

In order to contain this pandemic PM Modi announced the country will be put under lockdown for 21 days till April 14. The lockdown and the corona virus together wreaked havoc in the economy. Some reports have said that India and China are immune from this recession and on the other hand some are saying that the degree of the recession this time would be far more severe than 2008 Global Financial Crisis. And now the projections are made by various rating agencies about the growth rate of India. Let us quickly go through what are the various projections made by various institutions and organisations.

1. Goldman Sachs

  The US investment bank Goldman Sachs has slashed India’s growth forecast to 1.6 per cent in FY21 that is one of the lowest rates post war history. But that is not only the gloomy piece of news, rather it also expects a very quick and sequential recovery in the second half. “The 1.6 per cent growth for FY21 would be deeper compared to widely perceived “recessions” India experienced in the 1970, 1980 and in 2009,” it said.

2. Fitch

Fitch Ratings on Friday said it has slashed India’s growth forecast for the current fiscal to a 30-year low of 2 per cent, from 5.1 per cent projected earlier. It said in a statement that Fitch now expects a global recession this year. Fitch also said that MSMEs and the services segments are likely to be among the most affected with reduced consumer spending.

3. Standard and Poor’s

S&P Global Ratings lowered India’s growth forecast to 5.2 per cent in 2020. S&P Global Ratings said that the global economy is entering into recession amid the coronavirus pandemic. The agency also said that the countries that are most vulnerable to capital outflows are India, Indonesia and the Philippines.

4. Moody’s

Moody’s Investor Services had lowered India’s economic growth forecast for 2020 to 2.5 per cent from 5.3 per cent in the wake of COVID-19 outbreak that has been a challenge across economies around the world.

5. India Ratings

India Ratings has also lowered GDP growth forecast for FY21 to 3.6 per cent from 5.5 per cent for FY21. The rating agency also lowered GDP forecast for current fiscal to 4.7 per cent from the NSO’s advance estimate of 5 per cent. It also said that cash flow in MSME’s is already disrupted and IT and IT-enabled services have greater flexibility in their operations and quickly readjusted to the operations by allowing employees to work from home.

However, a lot of these projections depend largely on the period of lockdown. And the period of lockdown depends a lot on how soon this pandemic is contained. So, for this we will have to wait and watch.