IHS Markit, the leading source of critical information and insights, on Thursday said that the Indian economy is likely to pick up in the second half of 2020 as the impact of the COVID-19 pandemic decreases, and is expected to grow by 6.7% in the next financial year. During April and May, the pandemic and the resulted lockdown have created a severe disturbance in industrial production and consumer spending in India.
In its outlook on the Indian economy, the company said that critical negative impact is expected to result in a significant contraction in GDP in the April-June quarter of 2020, which leads to a recession in the FY 2020-21 with GDP expected to contract by 6.3% year-on-year.
India imposed a complete lockdown late March and from May govt. started easing the restrictions. Although, as the country started to unlock progressively, the early signs of recouping were visible in the most recent economic data. In a survey done by IHS Markit, the results exhibit that with the easing of restrictions related to covid-19 during May and June, the economic momentum of the country improved in June.
Rajiv Biswas, Asia Pacific Chief Economist at IHS Markit, said that the country will pick up with better economic growth momentum in the 2nd half of 2020 and favorable GDP rise of 6.7% in the FY 2021-22.
Despite this, the flow of Foreign Direct Investment (FDI) into the nation has increased significantly. In the first half of 2020, FDI by technology firms has reached around $17 billion. Increase majorly by the $10 billion new investment proclaimed by Google. Facebook, Amazon, and Foxconn are among the other global technology firms that have committed large new investments into India this year, IHS said.
IHS Markit foresees India’s expenditure on consumption to double from USD 1.6 trillion in 2020 to USD 3.2 trillion by 2030, measured in constant prices, increased by strong average annual GDP growth, and rapidly increasing per capita incomes for the country’s fast-growing middle-class urban households.
Also, the technological evolution of India is anticipated to boost the growth of e-commerce, changing the retail consumer market segment over the next decade. This will influence the major worldwide multinationals towards technology and e-commerce to the Indian market.
