Rating Agency Moody’s has revised the inflation-adjusted gross domestic product (GDP) growth of India for fiscal 2021-22 to 9.3 per cent from its earlier projection of 13.7 per cent due to the negative impact of the second wave of COVID-19, localised lockdowns and mobility curbs. The agency has also ruled out a sovereign rating upgrade for now.

The second wave will slow the near-term economic recovery and weigh on longer-term growth dynamics, which is why the agency has revised its projection of India’s fiscal deficit at 11.8 per cent of the GDP in FY22, from its earlier forecast of 10.8 per cent, it said in a release.

The wider deficit and slower growth are likely to drive the debt burden of the government to 90 per cent of the GDP in fiscal 2021-2022, which may rise gradually to 92 per cent in fiscal 2023.

Moody’s said in its report that a rating upgrade is unlikely in the near future. “We would change the outlook on India’s rating to stable if economic developments and policy actions were to raise confidence that real and nominal growth will rise to sustainably higher rates than we project.”

However, experts at Moody’s said that they expect the negative impact on the economic output to be limited to the April-June quarter, which will be followed by a strong rebound in the second half of this fiscal.

Fibre2Fashion News Desk (KD)

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