Economic Growth Projection Trimmed To 9.6% For Current Fiscal: Report

The Indian economy is likely to grow by 9.6 per cent in the current fiscal year 2021-22, according to credit rating agency India Ratings and Research (Ind-Ra). The company trimmed its projection of the gross domestic product (GDP) growth for the current fiscal from 10.1 per cent to 9.6 per cent, due to the scale of the second wave of the deadly COVID-19 pandemic in the country. (Also Read: Economy May Have Shrunk 12% In June Quarter Due To Covid Second Wave: Report )

During the previous financial year 2020-21, which witnessed the first wave of COVID-19 and the onset of the second, the economy contracted by 7.3 per cent, recording its worst-ever performance in more than four decades.

In the first quarter of the previous fiscal, the GDP contracted by a massive 23.9 per cent, and at 7.5 in the second quarter - resulting in the economy slipping into a technical recession. In the subsequent third and fourth quarters, the economy staged a V-shaped recovery, due to the gradual easing of lockdown restrictions.

The Fitch group company now projects the GDP growth to come in at 9.6 per cent in the current financial year, however, it added that it is contingent upon India vaccinating its entire adult population by December 31, 2021. 

The average daily vaccinations during June 1- June 20 totalled 32 lakh, which eventually rose to 87.3 lakh on June 21, when the revised vaccination rules come into effect across the country.

In case, the pace of vaccination is maintained close to the June 21 level, then the country will be able to achieve the 9.6 per cent target of economic growth. However, if the vaccination target gets delayed by three months either due to slow pace of vaccination or the non-availability of vaccines, then the GDP growth in the current fiscal will slip further down to 9.1 per cent, according to Ind-Ra.

Additionally, in a report published last week, domestic brokerage firm Motilal Oswal, said that the real GDP - an indicator of economic activity which takes nominal GDP and adjusts for inflation/deflation, is likely to come in at 8.7 per cent in the current financial year, down from 11.1 per cent projected earlier.