Moody's Investors Service has trimmed India's growth forecast to 9.3% for the financial year FY22 due to the second wave of the Covid-19 pandemic that hinders the country's economic recovery ahead. Earlier in February this year, Moody's had forecasted India's growth to 13.7% for FY22.
Affirming a 'Baa3' rating with a negative outlook for India, Moody's stated that obstacles to economic growth coupled with high debt and a weak financial system constrain sovereign credit profile.
In its research note, Moody's stated that the country is experiencing a severe second wave of coronavirus infections. Adding Moody's said that this will slow the near-term economic recovery and can also weigh on longer-term growth dynamics.
However, the rating agency also does not see the impact of second-wave to be as severe as during the first wave of Coronavirus infections.
The first wave resulted in a nationwide lockdown for a couple of months, however, Moody's said that the second wave 'micro-containment zone' measures are more localised, targeted and will likely be of shorter duration.
Highlighting India's healthcare segment, Moody's said that the Covid-19 second wave had put a significant strain on the healthcare system with hospitals overrun and medical supplies in short supply.
Maintaining below 3.5 lakh active cases mark, India registered about 3,48,421 new Covid cases, however, recorded the highest Covid death count of 4,205 in the last 24 hours. The country's total tally comes at 2,33,40,938 cases along with 1,93,82,642 recoveries and a death toll of 2,54,197.
The US-based rating agency also believes that the reimposition of lockdown measures would curb economic activity and could dampen the market and consumer sentiments.
Moody's expect the negative impact on India's economic output to be limited for the April - June 2021 quarter. While the rating agency sees a strong rebound in India during the second half of this year.
In the latest policy, RBI retained real GDP growth for 2021-22 at 10.5% consisting of 26.2% in Q1, 8.3% in Q2, 5.4% in Q3 and 6.2% in Q4.
India's Gross Domestic Product (GDP) for the third quarter ending December 2020 (Q3FY21), witnessed a marginal growth of 0.4% to Rs36.22 lakh cr against Rs36.08 lakh cr a year ago same period.
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