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CRISIL cuts Indian base-case GDP growth forecast by 50 bps
23 Mar '20
2 min read
Pic: Shutterstock
CRISIL recently cut India’s base-case gross domestic product (GDP) growth forecast for fiscal 2020-21 to 5.2 per cent from 5.7 per cent announced some time before. The new assessment factors in the huge uncertainty because of COVID-19, with risks to the forecast tilted downwards. The forecast will be reassessed continuously as new information comes in.
A serious downside to the rating agency’s base case can emerge from two developments. One, the pandemic is not contained by April-June 2020 globally, and makes the global slowdown more severe. And two, it spreads rapidly in India, affecting domestic consumption, investment, and production. These would further hurt confidence and the financial markets, CRISIL said in a press release.
In any case, India has little policy firepower to give a meaningful push to growth, and the pandemic is making it more difficult. While there will be steeper deceleration in global growth and India’s trade, what is unclear is the extent of impact on economy through domestic channels of production (supply) and consumption (demand).
The answer would depend largely on the extent of spread within India. So far, India is among the Asian economies that aren’t deeply impacted, the rating agency said.
India reported its first confirmed case on January 30. Over the past few weeks, that number has risen sharply.
A serious downside to the rating agency’s base case can emerge from two developments. One, the pandemic is not contained by April-June 2020 globally, and makes the global slowdown more severe. And two, it spreads rapidly in India, affecting domestic consumption, investment, and production. These would further hurt confidence and the financial markets, CRISIL said in a press release.
In any case, India has little policy firepower to give a meaningful push to growth, and the pandemic is making it more difficult. While there will be steeper deceleration in global growth and India’s trade, what is unclear is the extent of impact on economy through domestic channels of production (supply) and consumption (demand).
The answer would depend largely on the extent of spread within India. So far, India is among the Asian economies that aren’t deeply impacted, the rating agency said.
India reported its first confirmed case on January 30. Over the past few weeks, that number has risen sharply.
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