Moody's Investors Service said on Thursday it expects India's economy to shrink by 8.9% in the 2020 calendar year due to the COVID-19 pandemic, compared to an earlier forecast of a 9.6% contraction.
The revision comes as a rise in novel coronavirus cases slows in the world's second-most populous country, and economic activity picks up after a 23.9% contraction in April-June, when consumer spending, private investments and exports collapsed during one of the world's strictest lockdowns.
"The steady decline in new and active (COVID-19) cases since September, if maintained, should enable further easing of restrictions. We, therefore, forecast a gradual improvement in economic activity over the coming quarters," Moody's said in a note.
In September, Moody's had forecast the economy to shrink by 9.6% in the 2020 calendar year.
India is planning to announce a fresh round of stimulus totalling about $20 billion this week to help pull the economy out of its historic contraction, government officials told Reuters on Wednesday.
Finance Minister Nirmala Sitharaman is due to address the nation at 0700 GMT on Thursday.
Separately, Goldman Sachs upgraded India to "overweight", citing a domestic macro recovery. It said Indian equities were most "positively sensitive to the improving prospects of a vaccine".