Indian financial system to contract by 9% in present fiscal: S&P


New Delhi, September 14

S&P Global Ratings on Monday slashed its FY21 progress forecast for India to (-) 9%, from (-) 5% estimated earlier, saying that rising Covid instances would hold non-public spending and funding decrease for longer.

Weaker restoration in casual sectors accountable

  • Earlier, the ranking company had forecast 5% contraction for the Indian financial system within the present fiscal
  • It mentioned rising Covid instances in India will hold non-public spending and funding decrease for longer
  • It mentioned dangers to the expansion outlook embody a weaker restoration in casual sectors of the financial system and deeper financial losses for micro and small enterprises

“One factor holding back private economic activity is the continued escalation of the Covid,” S&P Global Ratings Asia-Pacific economist Vishrut Rana mentioned.

Rising Covid instances in India will hold non-public spending and funding decrease for longer. S&P Global Ratings now expects the nation’s financial system to contract by 9% within the present fiscal yr, which ends March 31, 2021, the US-based ranking company mentioned. For 2021-22 fiscal, it expects financial progress at 10%.

It mentioned dangers to the expansion outlook embody a weaker restoration in casual sectors of the financial system and deeper financial losses for micro and small enterprises.

“In addition, if credit quality worsens materially following the expiration of loan moratoriums, the recovery will slow. One factor that presents potential upside to growth is the availability of a widely-distributed Covid vaccine earlier than our current estimate around mid-2021,” S&P added.

It mentioned the 23.9% contraction within the April-June quarter was bigger than anticipated.

“While India eased lockdowns in June, we consider the pandemic will proceed to restrain financial exercise. New instances per day in India averaged practically 90,000 within the week ending September 11, based on knowledge from the World Health Organisation.

Last week, two different world ranking companies Moody’s and Fitch projected Indian financial system to contract 11.5% and 10.5%, respectively, within the present fiscal. However, Goldman Sachs has estimated the contraction at 14.8%. — PTI



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