Ratings agency S&P Global Ratings on Thursday lowered India’s growth forecast for the financial year 2021-2022, to 9.5%, from the earlier projected 11%. The ratings agency lowered the growth projection as a result of the lockdowns imposed in several states amid the second wave of Covid-19 in April and May.
“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% below normal,” S&P said in a research note.
The agency also flagged the risk of “further pandemic waves”, noting that only about 15% of the population has received at least one dose of the coronavirus vaccine.
India’s Gross Domestic Product contracted by an unprecedented 7.3% in the previous financial year, 2020-’21, hit by the pandemic and a nationwide lockdown that disrupted economic activities. Growth rate was initially estimated to be in double digits for this fiscal year, but the second wave of pandemic has prompted a downward revision from various agencies.
On Wednesday, ratings agency Moody’s Investors Service lowered its growth forecast for India to 9.6%, from the earlier estimate of 13.9%, Moneycontrol reported. Moody’s said faster vaccination progress will be important in restricting economic losses to the current quarter (April-June).
Earlier this month, the World Bank cut its growth projection to 8.3% from 10.1% estimated in April.
On June 4, the Reserve Bank of India revised its estimates for 2021-’22 to 9.5% from previous forecast of 10.5%. RBI Governor Shaktikanta Das had then announced the decisions of the central bank’s monetary policy committee. He said the sudden rise in Covid-19 infections and fatalities in the second wave of the pandemic, has “impaired the nascent economic recovery” that was underway.