Moody's Investors Service on Wednesday slashed India's growth forecast for the year 2021 to 9.6 percent, from 13.9 percent in the previous estimate. Moody's also said that economic sanctions will be limited in the June quarter due to rapid vaccination.
Moody's report titled 'Macroeconomics Economics - India: The economic shocks from the second wave of Covid will not be as severe as last year' said that high-frequency economic indicators suggest that the second wave of Covid has affected India's economy in April and May. However, this is expected to improve with the easing of restrictions by the states.
The report said that the return of the virus has increased uncertainty about India's growth forecasts in 2021, although it is likely that the economic loss will be limited to the April-June quarter.
Moody's further said, "We expect India's real GDP to grow at 9.6 percent in 2021 and 7 percent in 2022." The Indian economy has contracted by 7.3 percent in 2020-21, compared to a growth of four percent during the previous fiscal year.