New Delhi: Rating agency Moody’s has cut India’s gross domestic product (GDP) forecast for FY22 to 9.3 per cent from the earlier projection of 13.7 per cent and has ruled out a sovereign rating upgrade – at least for now.
The downward revision in GDP estimates comes on the back of a second wave of Covid infections across the country, which have triggered localised lockdowns and mobility curbs, except for essential services.
“As a result of the negative impact of the second wave, we have revised our real, inflation-adjusted GDP growth forecast down to 9.3 per cent from 13.7 per cent for fiscal 2021 (FY22),” the Moody’s release said.
India is experiencing a severe second wave of coronavirus infections, which Moody’s said, will slow the near-term economic recovery and could also weigh on longer-term growth dynamics. As a result, the rating agency now expects a wider general government fiscal deficit of about 11.8 per cent of GDP in FY22, compared with previous forecast of 10.8 per cent.
The combined impact of slower growth and a wider deficit, it believes, will drive the general government debt burden to 90 per cent of GDP in fiscal 2021, which will gradually rise to 92 per cent in fiscal 2023. Moody’s estimates are closer to those of IHS Markit, which had predicted Indian economy (as measured by GDP) to grow at 9.6 per cent in FY22.
