India Ratings cuts GDP growth forecast to 3.6%

Mumbai: Domestic credit rating agency India Ratings (Ind-Ra) on Monday cut its FY21 growth forecast to 3.6 per cent amid coronavirus-related worries.

It has assumed that a full or partial lockdown will continue till end of April and economic activities will be gradually restored only after May.

The report comes amid a crippling impact on economic activity due to the three-week lockdown till April 14 which is expected to only aggravate the difficulties around growth that were existing before the pandemic.

Some watchers are also estimating for a contraction of the economy in the June quarter. Ind-Ra said it expects India to clock a 2.3 per cent growth for the June quarter, down from its expectation of a 4.7 per cent gross domestic product (GDP) expansion in March quarter.

The agency said the initial and visible impact of the spread of the COVID-19 pandemic on the economy has been the disruption in the production of select manufacturing sectors due to the breakdown of supply chain, near-collapse of the tourism, hospitality and aviation sectors and a rise in the work load of the healthcare sector. Small businesses have begun to witness cash flow disruptions.

However, some of the services sectors such as financial services, information technology and IT-enabled services have greater flexibility in operations and they have quickly readjusted and/or are readjusting their operations by allowing employees to work from home, it said.