India’s economy is expected to grow by 12 per cent in 2021 following a 7.1 per cent contraction last year, as near-term prospects have turned more favourable, according to Moody’s Analytics, which recently said a stronger-than-expected December quarter gross domestic product (GDP) growth of 0.4 per cent following a 7.5 per cent contraction in the previous three months has turned India’s near-term prospects more favourable.

Domestic and external demand has been on the mend since the easing of restrictions, which has led to improved manufacturing output in recent months, it said.

“We expect private consumption and nonresidential investment to materially pick up over the next few quarters and strengthen the domestic demand revival in 2021,” it said.

“This forecast is equivalent to real GDP, in level terms, growing by 4.4 per cent above pre-Covid-19 levels (as of March 2020) by the end of 2021, or equivalently, by 5.7 per cent above the GDP level in December 2020 by the end of 2021,” it was quoted as saying by a news agency.