Ratings agency India Ratings and Research (Ind-Ra) on Tuesday revised its FY21 GDP growth forecast further downward to negative 11.8 per cent from a negative 5.3 per cent.
According to Ind-Ra, the quantum of negative GDP growth of 23.9 per cent recorded in 1QFY21 was much higher than its forecast of 17 per cent due to the impact of the Covid-19 pandemic and resultant lockdown.
"The negative 23.9 per cent growth in 1QFY21 is the first contraction in quarterly GDP data series which have been made available in the public domain since 1QFY98," the ratings agency said in a statement.
"The economic loss in FY21 is estimated to be Rs 18.44 trillion. However, GDP is expected to rebound and grow at 9.9 per cent YoY in FY22, mainly due to the weak base of FY21."
As per the statement, all indicators including mobility or consumption, are pointing towards a much weaker economic recovery.
"Out of 35 states or Union Territories (UTs), workplace mobility improved only in 16 states or UTs between end-May and end-August 2020," the statement said.
"As the number of Covid-19 infections picked up significantly across India in July, leading to local or regional lockdowns, mobility in many states or UTs reduced by end-August from end-June. As human mobility is closely linked with economic activity, even GSDP weighted workplace mobility depicts a similar trend as the workplace mobility."
Besides, Ind-Ra pointed out that after a pickup in June to 70 per cent of baseline, it declined to 68.5 per cent in July.
"However, the August (70.3 per cent) data again shows a pickup. Ind-Ra believes the work place mobility would remain low even in the next few months and would not return to normal till a vaccine is found."
Furthermore, Ind-Ra said FY21 GDP growth forecast of negative 11.8 per cent will be the lowest GDP growth in the Indian history (GDP data is available from FY51) and sixth instance of economic contraction, others being in FY58, FY 66, FY67, FY73 and FY80.
The previous lowest was negative 5.2 per cent in FY80.
"Given the size of contraction in 1QFY21 and reign of Covid-19 pandemic, the recovery curves estimated by Ind-Ra in June 2020 are unlikely to hold and have moved southwards," the statement said.
"Earlier, Ind-Ra had expected GDP in 4QFY21 to almost reach the level attained in 4QFY20. However, the estimates show that now the GDP in real terms (constant prices) will surpass the 4QFY20 level only in 4QFY22 and in nominal terms (current prices) in 3QFY22."
It added that while a second wave of infections is being witnessed globally, India still has not been able to flatten the first wave of infection curve.