Amid the second wave of COVID-19 in the country, leading credit rating agency India Ratings and Research or Ind-Ra revised the real gross domestic product (GDP) growth forecast for the financial year 2021-22 to 10.1 per cent on Friday, April. The earlier GDP growth projection by the agency for the fiscal was 10.4 per cent. The revision of the economic growth assumes that the second wave of the pandemic will begin to subside by mid-May 2021. The credit rating agency said that the impact of the second wave of the pandemic will not be as disruptive because the administrative response may remain confined to the regional or local lockdowns and containment zones.
Additionally, unlike the first wave of COVID-19, the response of the administration is not abrupt and is evolving gradually in a graded form. India Ratings and Research said that the demand side component of the GDP - which are government final consumption expenditure, private final consumption expenditure, as well as gross fixed capital formation are expected to grow in the financial year 2021-22.
The private final consumption expenditure is expected to grow at11.8 per cent, the government final consumption expenditure is expected to grow at 11 per cent, and the gross fixed capital formation is expected to grow at 9.2 per cent respectively in fiscal 2021-22, compared to the earlier forecast of 11.2 per cent, 11.3 per cent, and 9.4 per cent respectively.
The real GDP in the financial year 2021-22 is estimated to be Rs 148.2 lakh crore which is 10.7 per cent lower than the fiscal year's trend value. The consumption slowdown is estimated to contribute around 63.4 per cent of the decline.