Moody’s Investors Service said  that it expects India’s economy (gross domestic product) to shrink by 8.9 per cent in the current calendar year due to the COVID-19 pandemic, compared to an earlier forecast of a 9.6 per cent 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 per cent contraction in April-June, when consumer spending, private investments and exports collapsed during 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 per cent in the 2020 calendar year.

The government announced a fresh round of stimulus taking the total to around 29.88 lakh crore or 15 per cent of the GDP to help pull the economy out of its historic contraction.

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