Global rating agency Moody’s has cut India’s growth forecast for the calendar year 2021. Moody’s estimates that India’s GDP growth rate could be 9.6% in CY21, while earlier the rating agency had estimated the growth rate to be 13.9% in the year 2021.
Moodys says that due to the lockdown and corona restrictions due to the second wave of the corona virus, there will be a decline in economic activity in the first quarter of FY 2021-22 i.e. April-June. Also, India’s credit profile is also at risk from the second wave of Covid.
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Moody’s said that now with the opening of the lockdown, economic activity has picked up in May and June, which is now expected to make less losses in the June quarter. Moody’s said that while the growth rate is estimated to be 9.6% in the year 2021, the GDP growth rate can be 7% in the year 2020. Moody’s has rated India’s rating as BAA3 with a negative outlook.
Moodys Investors Service had earlier said that the Indian economy has made a rapid recovery from the impact of Covid, which is expected to grow India’s GDP at the rate of 9.3% in the full financial year FY22, while in the next financial year i.e. 2022-23. The GDP growth rate is expected to grow at the rate of 7.9%.
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Moody’s said that the effect of the lockdown and restrictions due to the second wave of Corona will not be as much as the first wave of Corona, because this time the lockdown was imposed in limited states. But this has led to a decline in economic activity in FY22Q1. This will improve and inflation-adjusted real GDP growth rate will be 9.3% during the current fiscal.
Let us tell you that according to the data released by NSO, India’s economy has declined by 7.3 percent during the financial year 2020-21. Rating agency Moody’s said that India’s GDP growth rate is expected to average 6% in the long term.
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Moody’s said in its report that the second wave of Covid has increased India’s credit profile risk, which may have an impact on long-term credit. The rating agency said that due to the slowdown in economic growth rate due to Covid 2.0, weak finance of the government and increased risk of financial sector, the credit profile risk of the country may increase.
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