S&P slashes India’s GDP development forecast to 9.8%


New Delhi, May 5

S&P Global Ratings on Wednesday slashed India’s GDP growth forecast for the current financial year to 9.8%, saying the second Covid wave may derail a budding recovery in the economy and credit conditions.

The US-based rating agency in March had forecast 11% GDP growth for India for the April 2021-March 2022 fiscal, on account of a fast economic reopening and fiscal stimulus.

S&P, which currently has a ‘BBB-’ rating on India with a stable outlook, said the depth of the Indian economy’s deceleration will determine the hit on its sovereign credit profile.


New projections

  • The US-based rating agency in March had forecast 11% GDP growth for India for the April 2021-March 2022 fiscal, on account of a fast economic reopening and fiscal stimulus
  • S&P said the depth of the Indian economy’s deceleration will determine the hit on its sovereign credit profile
  • The Indian government’s fiscal position is already stretched. The general government deficit was about 14% of Gross Domestic Product (GDP) in fiscal 2021, with net debt stock of just over 90% of GDP

The Indian government’s fiscal position is already stretched. The general government deficit was about 14% of GDP in fiscal 2021, with net debt stock of just over 90% of GDP.

“India’s second wave has prompted us to reconsider our forecast of 11% GDP growth this fiscal year. The timing of the peak in cases, and subsequent rate of decline, drive our considerations,” said S&P Global Ratings Asia-Pacific chief economist Shaun Roache. — PTI



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