Ratings agency Moody’s Investors Service on Thursday revised its forecast for India’s Gross Domestic Product in this calendar year to (-) 8.9%, from the earlier prediction of (-) 9.6%, reported Mint. The projection for the calendar year 2021 has been revised upwards to 8.6% from 8.1%.

“The steady decline in new and active cases since September, if maintained, should enable further easing of restrictions,” Moody’s said in its Global Macro Outlook 2021-22 report. “We therefore forecast a gradual improvement in economic activity over the coming quarters.”

It further said that if India’s trend in dealing with the coronavirus pandemic continues to spur greater mobility, coupled with development and dissemination of a vaccine, it could make the pandemic a “less important macro factor in 2021 and 2022”, Economic Times reported.

The ratings agency however noted that there was limited scope for interest rate cuts by central banks of emerging markets, including in India, due to their efforts on keeping inflation under check.

“We do not expect emerging market central banks to carry on with quantitative easing measures once the recovery strengthens,” Moody’s said, according to Mint.

On global economic recovery, Moody’s said that over the coming year it will be highly dependent on the development and distribution of a coronavirus vaccine, effective pandemic management as long as the virus remains a public health risk, and government policy support.

On Thursday, while announcing a slew of decisions, Finance Minister Nirmala Sitharaman cited Moody’s revision to make her case that India’s economy was gathering pace.

Meanwhile, the Reserve Bank of India, in its bulletin on Wednesday, said India’s economy is likely to enter a recessionary phase for the first time ever in second quarter (July-September) of the current financial year, with the gross domestic product expected to contract by 8.6%.