S&P flags substantial impact of lockdowns on Indian economy

New Delhi, April 22

S&P Global Ratings on Thursday said the Indian economy is projected to grow at 11% in the current fiscal, but flagged the “substantial” impact of broader lockdowns on the economy.

In its report on Asia-Pacific Financial Institutions, S&P said the control of Covid remains a key risk for the economy. New infections have spiked in recent weeks and the country is in the middle of a second pandemic wave.

“Our forecast growth of 11% for India in 2021 is followed by a 6.1-6.4% forecast increase for the next couple of years… Some targeted lockdowns have already been implemented and more will likely be needed. The impact of broader lockdowns on the economy could be substantial, depending on their length and scope,” it said.

S&P, which currently has a ‘BBB-’ rating on India with a stable outlook, has forecast an 11% growth in the Indian GDP for the fiscal beginning April 1 on account of a fast economic reopening and fiscal stimulus.

As per official estimates, the Indian economy contracted 8% in 2020-21 fiscal, which ended March 31, 2021.

Last week, another global rating agency Moody’s Investors Service had said the second wave of Covid infections presents a risk to India’s growth forecast, but double-digit GDP growth is likely in 2021 given the low level of activity last year.

Economies are recovering smartly, countries are rolling out vaccinations, and regional financing circumstances remain supportive. And yet, the pandemic has so seriously set back the finances of households and corporates, with deeply negative effects on lenders, S&P said. It expects banks may need years to fully recover. — PTI

Surge in cases may delay recovery: Fitch

• Fitch Ratings on Thursday affirmed ‘BBB-’ sovereign rating for India, saying a recent surge in coronavirus cases may delay GDP recovery, but it won’t derail the economy
• It maintained a negative outlook for the rating reflecting “lingering uncertainty around the debt trajectory”
• It forecast a 12.8% recovery in GDP in the current fiscal