RBI in its December policy meeting upgraded India’s GDP forecast and expects economy to shrink 7.5% this fiscal vs earlier forecast of 9.5% contraction as the economy is recuperating faster than anticipated. Further, even the IMF upgraded its forecast for GDP growth in FY22 (8.8% growth earlier to 11.5% growth) making it the only key nation to record a double-digit growth and reclaim the status of world’s fastest growing major economy.
Additionally, RBI expects growth to be in positive trajectory for Oct-Dec 2020 period and predicts a V-shaped recovery in FY21 driven by rollout of vaccine. Also, since mid-September, India has done well to flatten the curve of Covid-19 cases. The number of active cases had fallen to 1.5 lakh from a peak of 10 lakh cases in September.