The economic activity is likely to see a sudden rebound as early as the second half of the current fiscal, as investments revive to feed growing supply chains.
Indian economy, under a prolonged slowdown for the last two years and in acute crisis now due to coronavirus, will soon spring into hyperactivity, rebounding from a contraction this fiscal year to a scorching growth rate next financial year. With the economy struggling due to the spread of coronavirus, nearly all sectors face uncertainty and pessimism over business conditions. However, the economic activity is likely to see a sudden rebound as early as the second half of the current fiscal, as investments revive to feed growing supply chains. While there seems to be a consensus that India’s GDP will most likely contract in the current fiscal year, the GDP growth rate in the next financial year may hit as much as 9.5%, according to Fitch estimates.
“Our projection for FY21 GDP growth is -4.7 per cent and 7.2 per cent for FY22,” Sameer Narang, Chief Economist, Bank of Baroda, told Financial Express Online. With the supply-side achieving normalcy, the investment cycle will also pick up with a lag, accelerating in FY22 over and above the contraction in FY21, Sameer Narang added. However, what cannot be ignored is the base effect, which has the potential to further boost the next fiscal’s economic growth due to a steep fall in the economy in the current year.
Source: Financial Express
