CRISIL cuts India growth forecast

Rating agency-CRISIL has cut its growth estimate for India to 3.5 per cent for the next financial year (FY21) amid severe dent in the economic activity due to COVID-19 pandemic.

The agency said that an estimate of 3.5 per cent growth in 2020-21 assumes a normal monsoon as well as subsidising the pandemic's economic impact in June quarter. The slump in growth will be concentrated in the first half of the next fiscal, while the second half should see a mild recovery. Earlier, the agency had predicted economic growth of 5.2 per cent for the next financial year.

The country has been placed in 21-day lockdown as authorities try to restrict the spread of Coronavirus and minimise the number of infected cases. Further, the rating agency believes that the pandemic's cost is not only restricted to financial one like the post-Lehman Brothers’ crisis of 2008 but it also involves an enormous human suffering that has not been witnessed in decades.

Besides, it said even though services, which account for 41 per cent of the total exports, have been resilient so far, the impact in advance economies will hit Indian IT and tourism sectors as well as dent export earnings. Furthermore, the rating agency believes that the ongoing lockdown is affecting manufacturing activity & services and thereby, affecting the domestic supply chains. It added that the daily wage earners will be in the firing line.