Investment Institute
Macroeconomic Research

India: Growth returns, but challenges remain

  • 03 December 2020 (3 min read)

Key points

  • The Indian economy has been severely impacted by the pandemic. But recent counts of daily increases suggest India has passed its first peak of COVID-19 cases
  • Real GDP growth has improved sharply from -24% year-on-year in the June-quarter to -7.5% in the September-quarter, but near-term challenges remain
  • Sluggish domestic and external environments will likely serve as key drags on Indian growth. We expect growth to contract by 9% in FY21 before rebounding to 8% in FY22
  • Near-term risk surrounds the ongoing containment of the pandemic, which could weigh on domestic demand on the back of virus fears and income uncertainty
  • Geopolitical conflict remains tense, with India imposing economic sanctions against China. Under the current situation, these could exacerbate domestic condition

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