CRISIL pegged India’s Growth Rate for FY21 at 1.8%

CRISIL, the rating agency, recently pegged India’s growth rate at 1.8% for FY21- a downgrade from an earlier estimate of 3.5%.

Recent Predictions

CRISIL, the domestic rating agency, cut down its projections for economic growth in India for FY21 from the earlier 3.5% to 1.8%. However, among the major economies, India and China are the only exceptions to the worldwide decline in economic activities in 2020. S&P forecasted that the world economy would be contracting by 2.4%.

Permanent Demand Loss

The rating agency predicted permanent loss of demand in certain sectors such as retail trade, education, air, rail, road and water transport, logistics, real estate, entertainment, hotels and restaurants, and other personal discretionary services.

Large Industrial States

The agency highlighted the role of the pandemic’s impact on large industrial states on the country’s economy. Large industrial states like Tamil Nadu, Gujarat, Andhra Pradesh and Maharashtra are looking at an extension of lockdown conditions because of the rising number of COVID-19 cases. This will affect the states’ contribution to the industrial GVA (more than 50%) and services GVA (more than 40%).