Ratings agency Care Ratings on Thursday revised India's GDP forecast to predict that it may contract by 6.4 per cent as economic activity continues to be impacted by the COVID-19 pandemic. Earlier, in May, the rating agency had projected a decline in GDP growth of 1.5 to 1.6 per cent assumption that lockdown will be ending by the month-end.
"However, given that the nation is into a lockdown for July too with several restrictions on resumption of services in particular as well as movement of people, the cutoff date for normalcy will spread into the latter part of the third quarter and more likely to the fourth quarter," Care Ratings said in a release.
"Our assumption now is that 2/3 of the economic sectors would broadly be operating at 50-70% capacity by end Q3 and the balance may not even reach this state this year. In particular services like hospitality, tourism, entertainment, travel would take a much longer time pan India to resume anywhere close to normal," the release stated.
As far as Gross Value Added (GVA) across sectors are concerned, the agency predicted agriculture to grow at 2.5 per cent, while it said that secondary sectors (manufacturing, mining and electricity) will contract 9.5 per cent and services sector by 6.5 per cent.
However, it added that even production in agriculture sector will be handicapped due to base year effect as growth was high last year, at 4 per cent.