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Rashi Mehra made post

How much are latest projections on India’s GDP contraction for FY21?

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sarah Leo answered.
2 weeks ago

The projections on India GDP for the FY21 have not been too encouraging and Nomura is the latest to join the bandwagon. Nomura has projected that the Indian GDP for FY21 could contract by around 6.1%. Nomura also expects the RBI to pause on the rate cuts front in the August MPC meet and instead cut 25 basis points either in October or in December.

Nomura has also conceded that the high-frequency data did reveal a good deal of structural damage to the economy. In fact, the COVID pandemic has impacted the demand and the supply side of the economy and hence the structural impact, as per Nomura, could be quite sticky and long-lasting. Official data suggests that inflation could perk up in coming months.

A spike in inflation would put further pressure on the real GDP of the economy. However, Nomura expects the June quarter to be the worst quarter with 15.2% negative growth and is expected to recover after that. A lot will depend on government policy as well as the resilience of the Indian manufacturers. Low leverage will help in these times.