Moody’s Investors Service slashed India’s growth forecast to 9.3% for the current financial year, a 4.4 percentage point drop from 13.7% projected in February, on account of the second wave of Covid-19 surging across states.
The negative economic impact of the resurgence in cases will be limited to the April-June quarter and would be followed by a strong rebound in the second half of FY22, the global rating company said in a report on Tuesday.
The revision comes after Moody’s raised its growth forecast from 10.8% following the budget 2021-22 announcements. It maintained India’s sovereign credit rating at Baa3 with a negative outlook.
Moody’s raised its forecast for the next financial year to 7.9% from 6.2%.
S&P has estimated growth in the range of 8.2-9.8% for India in FY22, while Nomura revised its forecast to 10.8% from 12.6% before.
“India is experiencing a severe second wave of coronavirus infections which will slow the near-term economic recovery and could weigh on longer-term growth dynamics,” Moody’s said, noting that the impact will not be as severe as last year.