Ratings agency S&P Global Ratings on Thursday lowered India’s economic growth forecast to 9.5 per cent for this fiscal from an earlier prediction of 11 per cent.
According to the ratings agency, India’s growth in fiscal 2023 (ending March 31, 2023) will likely come in at 7.8 per cent.
“A gradual revival is underway after a severe second Covid-19 outbreak in April and May led to lockdowns across much of the country and to a sharp contraction in economic activity,” S&P Global Ratings said in a report.
“The lockdowns were more targeted compared with the blanket national lockdown seen last year but were still enough to lower discretionary mobility to more than 60 per cent below normal.”
However, it cited that manufacturing and exports were less severely affected compared with 2020, but services were acutely disrupted.
“Consumption indicators such as vehicle sales fell sharply in May 2021 and consumer confidence remains downbeat.”
“The economy has turned a corner now. New Covid-19 cases have been falling consistently and mobility is recovering. We expect this recovery to be less steep compared with the bounce in late 2020 and early 2021.” Besides, the agency pointed out that households are running down saving buffers to support consumption and a desire to rebuild saving could hold back spending even as the economy reopens.
Furthermore, it said that monetary and fiscal policies will remain accommodative but new stimulus “will not be forthcoming”.
