Due to a severe Covid-19 pandemic wave, S&P Global Ratings reduced its GDP growth prediction for India to 9.5 percent for the fiscal year ending March 31, 2022. It had previously anticipated an 11 percent growth rate.
The new figure comes barely a day after Moody’s Investors Service, a US-based rating agency, reduced India’s growth forecast for the calendar year 2021 to 9.6%.
In fiscal 2020-21, the Indian economy shrank by 7.3 percent as the government weathered the first wave of Covid-19, compared to 4% growth in 2019-20.
The Reserve Bank of India has also lowered its growth forecast for the current fiscal year to 9.5 percent from 10.5 percent previously. S&P, on the other hand, stated that the Asia Pacific region’s recovery is generally on track. During the vaccination role, there were some early stumbling blocks.
“A gradual revival is underway after a severe second Covid-19 outbreak in April and May led to lockdowns across much of the country and to a sharp contraction in economic activity,” S&P Global Ratings said in a report.
The economy has finally turned the corner. The number of new Covid-19 cases has been steadily decreasing, and mobility is improving. In comparison to the rebound in late 2020 and early 2021, we predict this recovery to be less pronounced.” Furthermore, the agency noted that households are depleting their savings buffers in order to maintain consumption, and that a desire to restore savings could hold back spending even as the economy recovers.