Rating agency Fitch on Tuesday, 8 September, projected a 10.5 percent contraction for the Indian economy in the 2020-21 financial year.
The projection comes days after data showed that the Gross Domestic Product (GDP) for the first quarter ended June contracted 23.9 percent, revealing the extent of damage the pandemic and the subsequent lockdowns have caused to the country's economy.
With economic activities almost brought to a standstill due to the nationwide lockdown to curb COVID-19, most sectors like manufacturing and construction received a heavy blow. Agriculture, on the other hand, offered some respite, having advanced 3.4 percent in the first quarter.
"GDP should rebound strongly in 3Q20 (third quarter from October to December) amid a re-opening of the economy, but there are signs that the recovery has been sluggish and uneven... We have slashed our GDP forecast for this fiscal year to (-) 10.5 percent, a huge revision of (-) 5pp compared to the June Global Economic Outlook (GEO)," Fitch was quoted as saying on Tuesday.
‘Act of God’ and ‘V-Shaped Recovery’
When the GDP data was released, Chief Economic Advisor KV Subramanian had said, “April-June quarter economic performance is primarily due to exogenous shock felt globally due to COVID-19 which resulted in global lockdown in April to June quarter. Even India was in lockdown in the first quarter.”
Highlighting on the indicators like the core sector growth which has experienced slower rate of decline since April, the CEA had said India is witnessing a V-shaped recovery, NDTV had reported.
"Core sector growth which had declined by 38 percent in April, has progressively reduced to 22 percent in May, 13 percent in June and 9.6 percent in July 2020. Core sector output is clearly showing a V- shaped recovery," Subramanian said.
Meanwhile, during the GST council briefing on 27 August, the finance minister had referred to the coronavirus outbreak as an ‘act of God’ which may lead to a contraction of the economy in the current fiscal.
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