S&P Global Ratings on Tuesday said India’s economy will contract 7.7 per cent in the current financial year instead of 9 per cent estimated earlier on rising demand and falling Covid-19 rates.

For the next financial year 2021-22, S&P projected growth to rebound to 10 per cent. Its revision in growth forecast for the current fiscal reflects a faster-than-expected recovery in the September quarter.

“Rising demand and falling infection rates have tempered our expectation of Covid-19’s hit on the Indian economy.

A faster recovery keeps more of the economy’s supply side intact and can set India up for more prolonged above-average growth during the recovery phase, it added.
In the statement, S&P said India is learning to live with the virus, even though the pandemic is far from defeated.

“It is no surprise that India is following the path of most economies across the Asia-Pacific in experiencing a faster-than-expected recovery in manufacturing production,” S&P Global Ratings Asia-Pacific chief economist Shaun Roache said.

India’s GDP fell 7.5 per cent in the July-September quarter against a contraction of 23.9 per cent in the April-June period. Earlier this month, Fitch also revised its forecast for India to a 9.4 per cent contraction from 10.5 per cent contraction seen earlier.