On Thursday, Moody's raised its forecast for India's growth to -8.9 percent for the calendar year 2020 from -9.6 percent earlier, in its Global Macro Outlook 2021-22 report. It has also raised its forecast for the upcoming year 2021 to 8.6 percent from 8.1 percent earlier.
A decline in new infections along with high recovery rates are bending the pandemic curve and allowing for further easing of restrictions on mobility, it said, adding that the test positivity rate in India has fallen below 5 percent.
"We therefore forecast a gradual improvement in economic activity over the coming quarters. However, slow credit intermediation will hamper the pace of recovery because of an already weakened financial sector," Moody's report said.
Further, it said that if these trends in the pandemic curve continue to spur greater mobility and social interactions, coupled with the development and dissemination of a vaccine, it could make the pandemic itself a less important macro factor in 2021 and 2022, it said.
For the April-June quarter, India's GDP contracted by a significant 23.9 percent, as per the government's official data. RBI has projected 9.5 percent contraction for the full fiscal year 2020-21.