Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research, on the IMF Growth Revision announced for India:
"It is not very surprising that IMF has revised its projections for the Indian economy in its June Economic Outlook and has forecast a contraction of 4.5% in GDP for FY21 against an expansion of 1.9% estimated in April. Clearly, the global as well as the domestic economic scenario has deteriorated over the last three months due to the continued transmission of the virus and the protracted lockdown in many parts of the world. The pan India lockdown which got extended to over two months followed by persistent disruption in economic activities in many parts of India including large cities, has had a severe impact on the economic output for the current quarter. Importantly, the likelihood of a strong revival in domestic household demand is uncertain in the near term given the limited fiscal space available at this point for any funded stimulus programmes. While Acuité Ratings believes the economy will recover steadily over the next few quarters and has currently pegged the GDP contraction for FY21 between 1.5%-2.5%, there are downside risks to these estimates if the expected demand recovery takes longer. Given the base effect, there is however, a strong case for a healthy GDP growth print beyond 6% in FY22."