on Jun 25, 2021)NEW DELHI: Global ratings agency S&P has lowered India’s GDP growth estimate to 9.5% in the current fiscal year from its earlier projection of 11%, citing the impact of the second wave of Covid.
“The economy has turned a corner now. New Covid-19 cases have been falling consistently and mobility is recovering. We expect this recovery to be less steep compared with the bounce in late 2020 and early 2021. Households are running down saving buffers to support consumption and a desire to rebuild saving could hold back spending even as the economy reopens,” the agency said in a latest report.
It expects the economy to grow by 7.8% in fiscal 2023.
“Permanent damage to private and public sector balance sheets will constrain growth over the next couple of years. Further pandemic waves are a risk to the outlook given that only about 15% of the population has received at least one vaccine dose so far, although vaccine supplies are expected to ramp up,” S&P said in its report.
Several agencies, brokerages and multilateral agencies have slashed India’s GDP growth projections for the current fiscal year due to the second wave although there is a view that the impact would be muted compared to the first wave and likely confined to the April-June quarter with the possibility of a spillover to July.
S&P said monetary and fiscal policies will remain accommodative but new stimulus will not be forthcoming.
