With India’s economic normalisation progressing ahead of expectations, the country’s Gross Domestic Product (GDP) growth estimates for current fiscal is expected to see upward revisions, Credit Suisse has said.

Several indicators are growing in double digits and as the weak base of fiscal 2019-20 kicks in, the year-on-year comparisons are rebounding, said Credit Suisse Research Analysts Neelkanth Mishra, Abhay Khaitan and Prateek Singh in a research note.

Global and domestic economic agencies have forecast the country’s GDP to contract anywhere from 4.5 per cent to 12.5 per cent this fiscal. This Credit Suisse research note came just few days before the Reserve Bank of India (RBI) said it expects Indian economy to contract 9.5 per cent this fiscal.

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RBI Governor Shaktikanta Das said on Friday that India’s GDP growth may break out of contraction and turn positive during January-March 2020 due to improved signs of recovery.

The World Bank expects India’s GDP growth in FY’20-21 to contract 9.6 per cent, sharply down from earlier June forecast of contraction of 3.2 per cent.

Double-digit indicators

This research note from Credit Suisse, a global wealth management firm, highlighted that e-way bills rose 10 per cent year-on-year in September (intra-State 19 per cent). Power demand is now up 16 per cent (North 29 per cent, West 16 per cent, East 23 per cent).

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Rail freight in last 10 days of September was 19 per cent higher, 15 per cent for the September month. Pharma market too turned positive and grew by 4.5 per cent in September.

By central regulations now nearly all activities are permitted (some still at low utilisation), and while some States (Maharashtra, Tamil Nadu, Kerala, Karnataka, Delhi) have pushed the opening of cinemas/schools to October 31, Credit Suisse expect them to follow others like West Bengal and Uttar Pradesh that continue to relax suburban trains and hotels/restaurants.

Covid-19 situation

On the Covid-19 front, the research note highlighted that reported daily cases fell to 70,000-80,000; lower infection-to-case (I-C) ratio. Encouragingly, with tests still at 1.1 million per day, the positive test ratio fell to 8.2 per cent (6.8 per cent last week). Infections though continue to be 24x cases as per ICMR’s 2nd sero-surveys in August-September. Mumbai saw a steep drop in I-C, but Delhi/ Ahmedabad did not. WHO estimates 10 per cent of world population is infected, implying a global I-C ratio of 20-22x.

Two ratios deserve attention: (1) percentage of India population with antibodies is still low; and (2) a separate study found a drop in seroprevalence in Mumbai slums.

Reported deaths/day continues to fall, reduction in bed occupancy in Delhi. Daily reported deaths fell in line with cases to 900-1000. National active cases are down 9 per cent from the September 19 peak to 9,25,000. Delhi Covid-19 bed occupancy is down 21 per cent since September 25.

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