Moody’s Projects 13.7% Growth In FY22, Expects 7% Contraction This Fiscal

Moody's on Thursday upped India's growth projection for the next financial year beginning April 1, to 13.7%, from 10.8% estimated earlier, on the back of normalisation of activity and growing confidence in the market with the rollout of Covid-19 vaccine.

For current fiscal, the U.S.-based rating agency expects the economy to contract 7%, lower than its previous estimate of 10.6% contraction.

Moody's Investors Service Associate Managing Director (Sovereign Risk) Gene Fang said "our current expectation is that in the current fiscal ending March 2021, the economy would contract 7%... We expect a rebound of 13.7% growth in the next fiscal on normalisation of activity and base effects."

The very large rebound incorporates the view that recovery in activity will continue, with the rollout of vaccines and growing confidence in the market that activities are coming back to normal, Fang said in an online conference on India Credit Outlook 2021 organised by Moody's and its India affiliate ICRA.

ICRA Principal Economist Aditi Nayar said it expects 0.3% growth in the third quarter (October-December) of current fiscal.

ICRA expects Indian economy to contract 7% in current fiscal and growth to rebound to 10.5% in the next fiscal beginning April 1.

"Recession in India has ended," she said, adding there could be upside to growth in FY22 if government's capital expenditure increases, budget announcements are implemented and vaccination drives are carried out.