Global Rating Agency Sharply Decreases India’s Growth for FY22

Rating agency Moody’s has cut India’s Gross Domestic Product (GDP) forecast for FY22 to 9.3% which was earlier 13.7%. This downfall in the revised GDP has come due to the Second wave of Covid-19 in India. It’s been almost two months now, that we are struggling and living amidst the second wave of it.
“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 (FY22),” the Moody’s release said. Covid-19 curbs the economy of India in a very bad way possible, the shutdowns, curfews and mobility surge has led to such dwindling situation. Yet, it’s imperative to protect lives.
India is experiencing severe second wave, which has slowed the near economic recovery, as a result, the rating agency now expects a wider general government fiscal deficit of about 11.8 per cent of GDP in FY22, compared with previous forecast of 10.8 per cent.
“A Rating upgrade is unlikely in the near future. However, 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,” Moody’s said.
“As of now, we expect the negative impact on economic output to be limited to the April to June quarter, followed by a strong rebound in the second half of the year,” Moody’s said. As a result, the rating agency has revised upwards its GDP growth forecast for India for fiscal 2022 to 7.9 per cent from 6.2 per cent. Over the longer term, we expect growth of around 6.0 per cent thereafter,” it said.

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