The Indian economy will suffer lasting damage from the coronavirus crisis, with growth slowing down after an initial strong rebound next fiscal, Fitch Ratings said on Thursday, forecasting the GDP at well below its pre-pandemic levels even after the crisis has passed.
In a report titled 'India Set for Slow Medium-Term Recovery', Fitch said after an initial strong rebound in the fiscal year beginning April 2021, growth will slow to around 6.5 per cent a year over FY23-FY26 (April 2022 to March 2026). India's coronavirus-induced recession has been among the most severe in the world, amid a stringent lockdown and limited direct fiscal support, it said.
The Indian economy had been losing momentum even ahead of the shock delivered by the COVID-19 crisis. The rate of GDP growth sank to a more than the ten-year low of 4.2 percent in 2019, down from 6.1 percent in the previous year. The pandemic brought a human and economic catastrophe for India, with over 1.5 lakh deaths. Though the deaths per million are significantly lower than in Europe and the US, the economic impact had been much more severe.
The GDP in April-June was 23.9 percent below its 2019 level, indicating that nearly a quarter of the country's economic activity was wiped out by the drying up of global demand and the collapse of domestic demand that accompanied the series of strict national lockdowns. "We expect the gross domestic product (GDP) to expand by 11 percent in FY22 (April 2021 to March 2022) after falling by 9.4 percent in FY21 (April 2020 to March 2021)," Fitch said.
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