Moody India GDP growth: In perhaps the sharpest downgrade received from agencies and institutions, ratings agency Moody cut down India’s growth forecast to 9.3% from its previous estimate of 13.7% for FY22.
Moody’s said the second wave outbreak of the COVID-19 virus will slow down the near-term economic recovery and could pull back on longer-term growth dynamics. The surge of the virus, driven by a highly contagious variant, has put significant strain on India’s healthcare infrastructure with overwhelming hospitals and medical supplies in short supply.
Moody India GDP growth:
Moody’s has raised India’s FY23 projection to 7.9% from its earlier forecast of 6.2%. It also raised India’s real GDP contraction in FY21 to 7.2% from its earlier estimation of 7%. Moody says that the second surge will not have a severe impact as much as the first wave did.
Government debt is also projected to rise to 92% in FY23 from 90% in the current fiscal year. Government’s fiscal deficit is expected to rise to 11.8% from 10.9%.
Unlike the first wave where nationwide lock-downs were applied for several months, the second wave containment measures are more localized, with micro-containment zones targeting small circles of localities and of shorter durations. Businesses and consumers have also become adapted to operating under pandemic’s restricted conditions.
Moody’s said that as of now, we expect the negative impact on economic output to be limited to the April to June quarter alone, followed by a strong rebound in the second half of the financial year.
An economic rating upgrade is unlikely to occur in the future, unless India’s economic policy and actions undertaken gives the confidence of the real and nominal growth of the economy.