While supply chain disruptions could play out, the overall impact on corporate credit is expected to be moderate to minimal though stresses are likely to be seen by the MSME and retail borrowers, said India Ratings and Research (Ind-Ra) in its latest report.
The second wave of COVID-19 infections will be less disruptive than the first wave for the business environment, despite the case load per day reaching more than 4x of the peak level attained during the first wave. This is because the administrative response is likely to be confined to the regional/local lockdowns and containment zones. Ind-Ra had, therefore, revised its GDP growth forecast for FY22 to 10.1 per cent from 10.4 per cent.
The demand-side components of GDP namely private final consumption expenditure, government final consumption expenditure and gross fixed capital formation are now expected to grow at 11.8 per cent, 11 per cent and 9.2 per cent YoY, respectively, in FY22, as against its earlier forecast of 11.2 per cent, 11.3 per cent and 9.4 per cent YoY, respectively.
The incremental counter cyclical fiscal spending will be muted in FY22, given the stretched fiscal condition. Also, the nature of fiscal support would be indirect and supportive, rather than any direct stimulus to augment aggregate domestic demand conditions, the report added.
The labour challenge is more manageable this time, though there could be a bout of disruptions. Unlike the last time, the challenge owing to the reverse migration is not visible in a significant way, the agency said in its report.
Fibre2Fashion News Desk (KD)