India's gross domestic product (GDP) is expected to contract 9.5 per cent in FY21, a rating agency said on Thursday. The continued lockdowns in some states have affected chances of recovery seen in May and June, ICRA said in a report.
"We have sharply revised our forecast for the contraction in Indian GDP in FY2021 (at constant 2011-12 prices), to 9.5 per cent from our earlier assessment of 5 per cent, with the climbing COVID-19 infections resulting in a spate of localised lockdowns in some states and cities, arresting the nascent recovery that had set in during May-June 2020," it added.
Most analysts have estimated that the country's GDP may contract in the range of 5-6.5 per cent in this fiscal 2020-21. Adding, ICRA said that the country's economy may have contracted by a sharp 25 per cent in the first quarter of FY21, and expects a shallow recovery in the subsequent quarters, with a contraction of 12.4 per cent in the second quarter of FY21 and a milder 2.3 per cent in the third quarter, followed by a growth of 1.3 per cent in the fourth quarter of FY21.
The unabated rise in coronavirus infections in the unlock phase and re-imposition of localised lockdowns in several states appear to have interrupted this recovery, she said. "Given the severity of the pandemic and the duration of the safety measures that need to be employed, we now expect a deeper pace of GDP contraction in Q2 FY21 relative to our earlier forecast," the report said.
"We anticipate more unevenness, as different regions move in and out of lockdowns, and persisting labour supply mismatches affecting supply chains and consumption patterns," it added.