Moody’s has revised its forecast for India’s economic growth in the current financial year downwards to 9.3 per cent from an earlier projection of 13.7 per cent. The rating agency has also denied any chances of a sovereign upgrade in near future.
With this, Moody’s has joined several analysts who revised their GDP forecasts for India in the face of a second wave of COVID-19 infections in the country. India has been facing over 4 lakh new COVID-19 cases daily for the past few days on account of more infectious variants of the coronavirus. Several states have imposed lockdowns or other strict restrictions to keep the recent surge in COVID-19 cases under control.
Revising its projections for India’s GDP growth, Moody’s said that the second wave of COVID-19 is expected to be less disruptive than the first wave.
Moody’s said the ecoonmic impact of recent surge in COVID-19 cases is expected to be limited to the April to June quarter, followed by a strong rebound in the second half of the year. However, the slower pace of growth will drag down near-term economic recovery and affect long-term growth dynamics. As a result, the agency revised its projection for the government fiscal deficit to 11.8 per cent of GDP in FY22, from an earlier projection of 10.9 per cent. Moody’s further expects general government debt burden to rise to 90 per cent of GDP in the current fiscal, which will rise to 92 per cent in FY23.
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