COVID-19 impact | Moody's sees India's real GDP contracting by 11.5% in FY21

The rating agency said the country's credit profile is increasingly constrained by low growth, high debt burden and a weak financial system.

Moneycontrol News

September 11, 2020 / 20:15 IST

Rating agency Moody's on September 11 projected India's real gross domestic product (GDP) to contract by 11.5 percent in FY21, CNBC-TV18 reported. This comes after the Indian economy shrank 23.9 percent during the April-June quarter, amid COVID-19-induced disruptions.

It said the country's credit profile is increasingly constrained by low growth, high debt burden and a weak financial system. It added that India's policy-making institutions have struggled to mitigate and contain the risks exacerbated by the COVID-19 pandemic.

However, it expects India's economic growth to rebound to 10.6 percent in FY22 on the back of a strong base effect.

Global rating agencies and research companies have slashed their GDP growth estimates for India in FY21. While Fitch Ratings expects the country’s GDP to contract by 10.5 percent this fiscal versus its earlier estimate of a 5 percent contraction, India Ratings expects an 11.8 percent contraction now versus a 5.3 percent contraction forecasted earlier.

Goldman Sachs has forecasted a sharper contraction at 14.8 percent in FY21, revised downwards from-11.8 percent it expected earlier. This is so far the deepest cut estimated for India's FY21 GDP.

COVID-19 Vaccine

Frequently Asked Questions

How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

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