Moody's cuts 2021 India's growth forecast to 9.6 pc

New Delhi: Moody’s Investors Service on Wednesday slashed India’s growth projection to 9.6 per cent for 2021 calendar year from its earlier estimate of 13.9 per cent, and said faster Covid vaccination will be paramount in restricting economic losses to June quarter.

The US-based rating agency said high-frequency economic indicators show that the second wave of Covid-19 infections hit India’s economy in April and May. With states now easing restrictions, economic activity in May is likely to signify the trough, it said in a report on India.

 “The virus resurgence adds uncertainty to India’s growth forecast for 2021; however, it is likely that the economic damage will remain restricted to the April-June quarter. We currently expect India’s



real GDP to grow at 9.6 per cent in 2021 and 7 per cent in 2022,”

Moody’s said in a report titled “Macroeconomics India: Economic shocks from second Covid wave will not be as severe as last year’s”. Flagging low innoculation rate, it said faster vaccination progress will be paramount in restricting economic losses to the current quarter. As of the third week in June, only about 16 per cent of the population had received one vaccine dose; of those, only about 3.6 per cent had been fully vaccinated.

While infection rates have been declining and restrictions relaxed in many regions, vaccination rates remain low. As a result, the risk of subsequent waves that could require further lockdowns cannot be ruled out.