InvestorQ : With the latest GDP better than expected, can we expect a positive GDP in fiscal 2020-21?
Rutuja Nigam made post

With the latest GDP better than expected, can we expect a positive GDP in fiscal 2020-21?

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6 months ago
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It must be said that analysts across brokerage houses and rating agencies have started revising upwards projections for India's economic growth in FY21 upwards; or at least the extent of contraction is being lowered, which is good enough. The trigger was the GDP contraction in Q2 improving to -7.5% from -23.9% in Q2.

There is a rush to upgrade or in other words, reduce the contraction estimates. For example, QuantEco Research has toned down its full year GDP projections from -9.5% to just -8.3%. According to QuantEco, the combination of aggressive India unlocking, accommodative monetary conditions and structural reforms helped.

Even CARE Ratings has upgraded its estimates saying that the economy would now shrink just about -7.7% for the full year as compared to its original estimates of -8.2%. This can be attributed to the gross value added or GVA in manufacturing growing slightly by 0.6% in Q2FY21 after negative sequential growth for 4 previous quarters.

ICRA has done a very major upgrade from -11% to -7% levels. One of India’s reputed research houses of SBI expects the contraction to improve from -10.9% to single digits. The only exception to this bandwagon is Motilal Oswal which has downgraded its GDP projection from -6.5% to -7.5%.

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