expected at 1% on-year growth

expected at 1% on-year growth

Covid-19 vaccination drive at a Government health centre during Covid-19 emergency in Kolkata, India, 03 May, 2021. Pfizer in talks with India over expedited approval for Covid-19 vaccine according to an Indian media report.

Indranil Aditya | NurPhoto | Getty Images

India’s economy is expected to have improved in the three months that ended in March — but analysts have trimmed growth expectations for the current quarter that ends in June.

It comes as India continues to battle a devastating second wave of coronavirus outbreak.

Gross domestic product for the January to March period — India’s fiscal fourth quarter — is due Monday around noon GMT. India’s fiscal year starts in April and ends in March the next year.

Reuters reported that economists polled have a median forecast of 1% on-year growth for the March quarter — that’s up from 0.4% in the previous quarter. However, economists are less upbeat about the current quarter ending in June.

We need to get to a critical vaccination level, immunization level, in India to stabilize the outbreak — and that is critical for economic growth.

The median growth forecast for the three months between April and June is 21.6% — down from an earlier estimate of 23%, Reuters reported. For the full fiscal year 2022, the median forecast is down from a previous estimate of 10.4% growth to a 9.8% expansion.

India is the second worst-infected country in the world behind the United States. It has reported more than 28 million cases and over 329,000 deaths.

Expected growth is ‘cold comfort’ for India

Eyes on ratings

Neumann added that based on trends seen last year, the Indian economy tends to bounce back quickly once virus cases come off the peak. He said he expects the situation to improve by the end of the September quarter.

A robust vaccination drive can also reduce risks related to any potential downgrade of India’s sovereign ratings, which has become a concern among investors, according to Kaushik Das, chief economist for India and South Asia at Deutsche Bank.

Ratings agencies have said they do not see any imminent changes to India’s sovereign ratings yet. They expect the economic fallout from the second wave to be limited to the June quarter and predict it will not likely be as severe as last year, when India implemented a months-long national lockdown.

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