India’s recovery gaining steam, estimate recovery at 10% in FY22: S&P Global
The flattening of COVID-19 curve, rise in government spending and better performance from the agriculture sector have placed India on the path of economic recovery in the financial year 2021-2022, S&P Global Ratings said.
S&P Global Ratings on Tuesday said it estimates India's economic recovery at 10 percent in FY22. The flattening of the COVID-19 curve, rise in government spending and better performance from the agriculture sector have placed the country on the path of economic recovery in the financial year 2021-2022, it said.
Consistently good agriculture performance, flattening of COVID-19 infection curve and pick up in government spending are supporting the economy, it said.
The global rating agency also noted that India needs many things to be right for its recovery to continue. This includes the need to quickly and thoroughly vaccinate most of its 1.4 billion people.
“Emergence of more contagious COVID-19 variants with the potential to evade vaccine-derived immunity pose a major risk to the country’s recovery,” the agency said.
Further, the possibility of early withdrawal of global fiscal stimulus also poses a major risk to India’s recovery, it added.
However, it is of the view that India’s near-term prospects are positive while the recent Union Budget 2021-2022 will also support the economic recovery.
Meanwhile, the prospects of improving growth is critical to its ability to sustain higher deficits. S&P estimates India to face a permanent loss of about 10 percent of GDP output versus its pre-pandemic path.
A sustained corporate earnings rebound is key for ratings to stabilize, the agency said. It estimates the banking system’s weak loans ratio at 12 percent of gross loans and credit cost to remain elevated at 2.2 percent-2.7 percent.
S&P believes that faster economic recovery, government and RBI measures cushioned the effect of the crisis on bank balance sheets. It expects India’s banking system’s performance to start improving materially in FY23.
(Edited by : Ajay Vaishnav)
First Published: Feb 16, 2021 9:09 AM IST
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
Lok Sabha Elections 2024 | Assault allegations or political accusations— what's Swati Maliwal controversy all about
May 19, 2024 2:25 PM
Phase five Lok Sabha polls: Rae Bareli, Amethi among 14 UP seats going to polls on Monday
May 19, 2024 1:03 PM
AAP protest walk: Arvind Kejriwal challenges BJP to arrest entire party, Delhi Police imposes Section 144
May 19, 2024 12:26 PM
Terror attacks in Kashmir raise concerns ahead of May 20 and May 25 election
May 19, 2024 12:15 PM