The economy of India is expected to grow by 12 percent in 2021 following a 7.1 percent contraction last year, as near-term prospects have turned more favourable, Moody's Analytics said.

"We expect private consumption and nonresidential investment to materially pick up over the next few quarters and strengthen the domestic demand revival in 2021," Moody's said. It adds,  "This forecast is equivalent to real GDP, in level terms, growing by 4.4 percent above pre-Covid-19 levels (as of March 2020) by the end of 2021, or equivalently, by 5.7 per cent above the GDP level in December 2020 by the end of 2021".

A stronger than expected December quarter GDP growth of 0.4 percent following a 7.5 per cent contraction in the previous three months has turned India's near-term prospects more favourable, it said.

Domestic and external demand has been on the mend since the easing of restrictions, which has led to improved manufacturing output in recent months. Moody's saw real GDP growth of 12 percent in the 2021 calendar year, partially due to a low base-year comparison.

GDP: Double digit growth expected in FY22: Report

New Forecast: Covid vaccines help inject hope in world economy

Saudi reduces April crude for some Asian refiners, maintains India supply: Report