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India’s economic recovery gaining steam, S&P says | India’s economic recovery gaining steam, S&P says |
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South Asia’s largest economy, India, is on track to recover from a pandemic-led contraction by next year, according to ratings agency S&P Global. It expects the economy to grow ten percent in fiscal 2022. | South Asia’s largest economy, India, is on track to recover from a pandemic-led contraction by next year, according to ratings agency S&P Global. It expects the economy to grow ten percent in fiscal 2022. |
“Consistently good agriculture performance, a flattening of the Covid-19 infection curve, and a pickup in government spending are all supporting the economy,” the agency said in its report on Tuesday. | “Consistently good agriculture performance, a flattening of the Covid-19 infection curve, and a pickup in government spending are all supporting the economy,” the agency said in its report on Tuesday. |
For the full fiscal 2021, which ends on March 31, India’s economy is expected to shrink 7.7 percent. | For the full fiscal 2021, which ends on March 31, India’s economy is expected to shrink 7.7 percent. |
The speed with which the economy recovers from the coronavirus crisis will have “important implications” for the country’s sovereign credit rating, said S&P. “This includes the sustainability of the government’s strained fiscal position,” it added. | The speed with which the economy recovers from the coronavirus crisis will have “important implications” for the country’s sovereign credit rating, said S&P. “This includes the sustainability of the government’s strained fiscal position,” it added. |
India’s deficit target for the next fiscal year is around 6.8 percent of GDP, which is higher than levels before the pandemic. S&P has estimated that India faces a permanent loss of around 10 percent of GDP output compared to its pre-pandemic path. | India’s deficit target for the next fiscal year is around 6.8 percent of GDP, which is higher than levels before the pandemic. S&P has estimated that India faces a permanent loss of around 10 percent of GDP output compared to its pre-pandemic path. |
The report said that near-term prospects are positive, as a declining number of new Covid-19 cases allows for a gradual relaxation of restrictive social measures. India has reported the second-highest number of cases in the world, with over 10.9 million infections. | The report said that near-term prospects are positive, as a declining number of new Covid-19 cases allows for a gradual relaxation of restrictive social measures. India has reported the second-highest number of cases in the world, with over 10.9 million infections. |
Last month, the nation started a mass vaccination campaign, which aims to inoculate as many as 300 million people. | Last month, the nation started a mass vaccination campaign, which aims to inoculate as many as 300 million people. |
“We view Covid vaccinations as critical to India’s recovery over the next few years, and as key to normalizing demand,” the S&P said, warning that “The emergence of yet more contagious Covid-19 variants with the potential to evade vaccine-derived immunity [presents] a major risk to this recovery.” | “We view Covid vaccinations as critical to India’s recovery over the next few years, and as key to normalizing demand,” the S&P said, warning that “The emergence of yet more contagious Covid-19 variants with the potential to evade vaccine-derived immunity [presents] a major risk to this recovery.” |
For more stories on economy & finance visit RT's business section | For more stories on economy & finance visit RT's business section |