New Delhi, May 11
Moody’s Investors Service on Tuesday slashed India’s growth forecast for the current financial year to 9.3%, from the 13.7% projected earlier, on account of the negative impact of the second wave of Covid.
India is experiencing a severe second wave of coronavirus infections which will slow the near-term economic recovery and could weigh on longer-term growth dynamics, it said. “As of now, we expect the negative impact on economic output to be limited to the April-June quarter, followed by a strong rebound in the second half of the year.
“As a result of the negative impact of the second wave, we have revised our real, inflation-adjusted GDP growth forecast down to 9.3% from 13.7% for fiscal 2021 and to 7.9% from 6.2% in fiscal 2022. Over the longer term, we expect growth of around 6% thereafter,” Moody’s said.
On the fiscal front, Moody’s expects the renewed surge in the virus to contribute to a marginal shortfall in revenue and a redirection of spending toward healthcare and virus response relative to what the government budgeted in February.
“As a result, we now expect a wider general government fiscal deficit of about 11.8% of GDP in fiscal 2021, compared with our previous forecast of 10.8% and an estimated 14% in fiscal 2020,” it added.
Moody’s said the combined impact of slower growth and a wider deficit would drive the general government debt burden to 90% of GDP in fiscal 2021, gradually rising to 92% in fiscal 2023.
India is facing the world’s worst outbreak of Covid, with more than 3 lakh new cases daily being reported for two weeks now, and the new cases reached more than 4 lakh new daily cases over the weekend. — PTI
- The global ratings agency had earlier projected 13.7% growth for the current fiscal
- On the fiscal front, it expects a marginal shortfall in revenue due to surge in Covid and a redirection of spending toward healthcare and virus response relative to what the government budgeted in February
- It expects government’s fiscal deficit at 11.8% of the GDP as compared to previous forecast of 10.8%