Following two separate rosy projections by the International Monetary Fund and the OECD, we have similar news about India’s GDP growth from Moody’s Analytics.
India’s gross domestic product is projected to grow by 12% in 2021, Moody’s Analytics stated. “India’s near-term prospects have turned more favorable following a stronger than expected December quarter, when GDP grew by 0.4% over the year.
Domestic and Export Demand
Domestic and external demand has been on the mend since the easing of restrictions, which has led to improved manufacturing output in recent months,” Moody’s Analytics declared in an update to its India Forecast. Moody’s Analytics expects private consumption and non-residential investment to pick up in the next few quarters and strengthen domestic demand revival in 2021 as reported in the Daily Mint.
Referring to the impact of the Covid-19 pandemic and possible second/third waves, the company said “Our March baseline forecast assumes that herd immunity is unlikely to be reached before the end of 2022.”
(Earlier this month, Moody’s Investors Service, which operates independently of Moody’s Analytics, projected the Indian economy to grow 13.7% in FY 2022, which ends March 31, 2022. While Moody’s Analytics makes calendar year projections, Moody’s Investors Service provides fiscal year estimates.).
Finance Ministry Upbeat Too
In parallel, India’s Finance Minister was equally upbeat. Nirmala Sitharaman maintains that India is back on the road to sustained recovery. She stated, “India’s growth is definitely on the higher growth benchmark and also it is sustained.” On the basis of high frequency indicators such as purchasing mangers’ index in manufacturing and services, e way bills, good and services tax (GST) and rail freight collections, she expressed confidence that India is back on the growth path. This also indicates towards increased consumption in the economy and points towards clear, positive economic revival. Reportedly, this fiscal quarter also saw increase in Indian exports by 40%. This was due to the surge in demand for engineering items, chemical substances and life style merchandise like carpets. Iron, aluminum and ferro- metals also saw double digit growth in exports due to demand from China, Germany, Thailand and Singapore.
