Bhubaneswar: Moody’s, Barclays, and Oxford Economic have put out their latest readings of the India economy. However, their prognosis appears so dichotomous that they make for a hilarious reading. While Barclays and Moody’s have seen signs of green shoots following a few recent policy initiatives by the government, Oxford Economic has painted a much gloomier picture. It said the country’s output will be 12 per cent below the pre-pandemic levels through the middle of this decade and things are going to worsen only.
Moody’s Investors Service Thursday upped India’s growth forecast to (-) 10.6 per cent for the current fiscal, from its earlier estimate of (-) 11.5 per cent, saying the latest stimulus prioritises manufacturing and job creation, and shifts focus to longer-term growth.
Moody’s said the latest measures aim to increase the competitiveness of India’s manufacturing sector and create jobs, while supporting infrastructure investment and is “credit positive” as it presents potential upside to growth forecasts. “We have revised our real, inflation-adjusted GDP forecast for fiscal 2020 (April 2020-March 2021) to a 10.6 per cent contraction, from 11.5 per cent drop previously,” Moody’s said.
On the other hand, British multinational investment bank and financial services company Barclays Thursday revised India’s GDP forecast for FY22 to 8.5 per cent from 7 per cent earlier as the economy is seeing faster return to normalcy with recovery in both consumption and investment following government’s fiscal and monetary stimulus measures.
Barclays said that the flattening of Covid-19 curve in the country and the prospect of an effective vaccine early next year alongside high sero-prevalence of antibodies across the population support the case for a more durable economic recovery.
Differing from these two projections, Oxford Economics says India will be among the worst-hit major economies of the world even after the Covid-19 pandemic disappears. According to the study, the country’s output will be 12 per cent below the pre-pandemic levels through the middle of this decade.
The balance sheet stress that had been building before the coronavirus outbreak will probably worsen, Priyanka Kishore, head of economics for South Asia and South-East Asia, wrote in the report. She projects potential growth for India at 4.5% over the next five years, lower than 6.5% before the virus.