Mumbai: Despite the Reserve Bank of India's (RBI) massive actions to spur the economy, India's gross domestic product (GDP) is likely to contract by 4.5% in the April June 2020 quarter and will rise by only 2% in 2020-21 on the coronavirus impact, according to domestic rating agency Icra.
While announcing several measures in the policy review, the RBI refrained from giving its estimate on both growth and inflation, saying things are fluid and rapidly changing.
The Indian economy was already supposed to clock a decadal low growth of 5% in 2019-20, according to official estimates, and the coronavirus-related worries have only compounded the problems. "Regardless of the measures announced now by the RBI, we are lowering our base case scenario for GDP growth to (-)4.5% for Q1 FY2021 and to 2% for FY21," Icra said.
They said the estimate is guided by the rapidly growing uncertainties over the duration of the impact of coronavirus on economic activity in India and the rest of the world. The RBI's policy measures got welcomed as a set of "comprehensive announcements" by the agency.
