American rating agency S&P says localized lockdowns in parts of the country to break the chain of Covid-19 transmission could affect India’s economic recovery.
Delhi’s Connaught Place looks deserted amid the ongoing Covid-19 lockdown on Tuesday (Image credit: PTI)
HIGHLIGHTS
- GDP for the 2021-22 financial year could fall by a further 1.2 percent in a moderate scenario: S & P.
- According to S&P, the current bans were not as extensive compared to last year
- Q1 GDP growth will have significant base effects on overall growth: S & P.
The second wave of Covid-19 infections could jeopardize India’s economic recovery, says the American rating agency S&P. A sharp rise in new cases has led to lockdown-like restrictions across the country since April this year.
In its assessment, S&P said, “In a moderate scenario with the pandemic peaking later this month, full-year GDP could fall another 1.2 percent.”
The decline in GDP (gross domestic product) would deepen to 2.8 percent in a “severe” scenario, added the rating agency.
S&P said that too The current bans were not that broad compared to those enforced in India last year as people and businesses are now familiar with reduced mobility.
The effects of the new wave of Covid-19 infections are likely to be less severe this time, predicts S & P, one of the three largest rating agencies alongside Moody’s Investors Service and Fitch Ratings.
The pandemic is far from over # Emerging MarketsThis leaves the recovery prone to setbacks. Learn more: https://t.co/BG2hipATS7 pic.twitter.com/9sQUOuP5IZ
– S&P Global Ratings (@SPGlobalRatings) May 13, 2021
However, S&P adds that private demand in India will see a sharp decline as a result of the second wave of Covid-19 infections.
GDP growth in the first quarter (April to June) will have significant base effects on total growth numbers for fiscal year (FY) 2021-22, according to S&P.
The effects of the second wave of the Covid-19 pandemic on India’s economic recovery have already begun.
Data from Mumbai-based think tank CMIE (The Center for Monitoring the Indian Economy) states that localized lockdowns affected more than 70 lakh jobs in various states in the country.
The United Nations on Wednesday raised India’s growth forecast for fiscal year 2021-22 by 7.5 percent. This corresponds to an increase of 0.2 percent compared to the UN forecast from January this year.
In addition, the United Nations forecast India’s GDP growth of 10.1 percent in 2022.
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