Ratings agency CRISIL has lowered India's gross domestic product (GDP) growth forecast to 9.5 per cent for the current fiscal compared to 11 per cent projected earlier. The downward revision reflects the major hit the two engines of growth -- private consumption and investment -- have taken due to the second Covid-19 wave.
"The second Covid-19 wave has thrown cold water over the Indian economy that was beginning to warm up after the most severe contraction since Independence. The rash of afflictions that followed forced states to lock down, hurting consumer and business confidence yet again," the report titled "Pinpricked growth" said.
The daily Covid-19 cases seem to have peaked for now, though they remain above the peak of the first wave. India has reported 1,00,636 new COVID-19 cases and 2,427 deaths in the last 24 hours, the health ministry data shows. "The risks of another wave and tardy vaccinations mean states would be chary of fully unlocking anytime soon," the CRISIL report said.
As per the CRISIL economists, Covid-19 restrictions will continue and mobility will remain affected in some form or other, at least till August. They said vaccination will play a huge role in economic recovery. "The pace of economic recovery will also be a function of what the pace of vaccination is in the coming months," the report said.
The government plans to vaccinate India's entire adult population -- about 68 per cent of the total population -- by December. CRISIL terms it a "tall order even if there are sufficient vaccines available".
Medical scientists have projected that India could be hit by the third Covid-19 wave but its timing can't be anticipated. "A third wave would pose a significant downside risk to the growth forecast, as would a slower-than-anticipated pace of vaccination," the report said, adding that in such a scenario, the GDP growth could be around 8 per cent.
Like CRISIL, the Reserve Bank of India (RBI) has also revised its real GDP projection from 10.5 per cent to 9.5 per cent in 2021-22 amid the second wave of Covid-19 and localised lockdowns.
India's economy grew at 1.6 per cent in the fourth quarter of 2021-21, recording a slight pickup in GDP growth amid the Covid-19 second wave hitting the economy hard. In the full fiscal year, the economy shrunk by -7.3 per cent as the Covid-19 pandemic ravaged the economy. The contraction in FY21 GDP is worse in more than 40 years, the government data shows.