May 11, 2021 07:48 PM
Moody’s slashes India’s FY22 GDP forecast, India, hit by a deadly second wave of the coronavirus disease (Covid-19), saw an increase in the daily number of cases and related fatalities. But in the last two days, the number of cases have been declining.
Rating agency Moody’s Investor Service on Tuesday slashed India’s Gross Domestic Product (GDP) growth forecast for the current financial year 2021-22 to 9.3 per cent from the projected 13.7 per cent due to the negative impact of the second wave of the coronavirus disease (Covid-19). The second wave will slow down the near-term economic recovery and could weigh on longer-term growth dynamics, Moody’s said.
Issuing a release, it said the negative impact on India’s economic output is expected 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 per cent from 13.7 per cent for fiscal 2021 and to 7.9 per cent from 6.2 per cent in fiscal 2022. Over the longer term, we expect growth of around 6 per cent thereafter,” the rating agency added.
India, hit by a deadly second wave, saw an increase in the daily number of cases and related fatalities. But in the last two days, the number of cases have been declining. Apart from Moody’s, two other agencies have also predicted a downfall in India’s GDP growth in the current financial year due to the deadlier second wave of the pandemic.
Moody’s slashes India’s FY22 GDP forecast, also said it expects a wider general government deficit of around 11.8 per cent of the GDP in fiscal 2021, compared with its previous forecast of 10.8 per cent and an estimated 14 per cent in fiscal 2020.
The combined impact of slower growth and wider deficit will drive the general government burden to 90 per cent of the GDP in fiscal 2021 which will gradually increase to 92 per cent in fiscal 2023, it said in the release.