CARE Ratings Pegs GDP Around 1.1% To 1.2% For FY 2021

Given the uncertainty surrounding the pandemic and difficult roadmap of recovery post lockdown revocation, CARE Ratings has estimated the GDP to grow around 1.1% to 1.2% for the full fiscal year ending 2021 under certain assumptions.

Gross Value Added has been estimated to grow at 1.4% for the full year. However, low indirect tax collections during the year are likely to weigh on the overall GDP growth.

"This estimate is based on the assumption that post June 2020, the activities would restore very gradually and may not even attain 50% of normalcy for certain sectors for the entire year. A downside to this growth estimate could arise from uneven/shortfall in monsoon, unavailability of labour, prolonged restrictions or lockdown, delay in resumption of industrial activities, subdued consumption demand and muted investment by both private and government sectors," the ratings agency said in a release.

According to the ratings agency, going ahead, there is a lot of uncertainty as to when the pandemic will subside and economic activities resume in the country.

"Disruptions and halting of activities led by countrywide lockdown impacted most economic and commercial activities across the country. This would have a lasting impact on economic growth in the ongoing fiscal year as well. Despite government exempting certain select activities pertaining to agriculture and related activity, banking including NBFCs and HFCs, construction activities in rural areas, some SEZs etc. from the lockdown restrictions, these activities have remained muted due to labour shortages and other operational issues," it noted in a release.

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