GDP To Bounce Back To 10.4% Next Fiscal Year By Base Effect: Rating Agency

The gross domestic product (GDP) growth will bounce back to 10.4 per cent year on year (y-o-y) in the next fiscal year, primarily driven by the base effect, according to estimates by rating agency India Ratings and Research (Ind-Ra). The estimate also shows that after recording negative growth during for several months in the current financial year, the GDP growth will turn positive at 0.3 per cent year-on-year in the fourth and last quarter of the current fiscal. (Also Read: GDP To Expand 0.08% In December Quarter, Growth Pegged At 8.5%: Barclays )

Although the recovery in the next fiscal or 2021-22, on a year-on-year basis will be V-shaped, the size of the GDP will barely surpass the level achieved in the financial year 2019-20 and will be 10.6 per cent lower than the trend value. The impact of the COVID-19 pandemic and induced lockdown on the economy, although slowly reducing, will continue to delay the normalisation of activities, especially in the contact-intensive sectors. Till mass vaccination or herd immunity is achieved, the pace of economic growth in such sectors will be slow.