S&P Global Ratings on May 5, 2021, revised down India’s GDP growth forecast to 9.8 per cent for the financial year 2022 stating that the second wave of the COVID-19 pandemic may derail India’s budding recovery and credit conditions.
India’s second wave prompted S&P to reconsider its previous forecast of 11 per cent GDP growth this fiscal year. “The timing of the peak in cases, and subsequent rate of decline, drive our considerations,” said Shaun Roache, Chief Economist, S&P Global Ratings Asia-Pacific.
The increasing number of COVID-19 variants infection cases and limited vaccination coverage point towards a peak in infection rate around late June. This peak could have adverse effects on the funding and credit conditions, the study mentioned.
The second wave of the COVID-19 pandemic can possibly knock off 2.8 per cent points from India’s GDP growth rate in FY22.
In March, the US-based global rating agency S&P had predicted an 11 per cent GDP growth rate for India from April 2021 to March 2022 owing to a fast economic reopening and fiscal stimulus.
S&P further mentioned that the Indian economy’s deceleration rate will further give insights into how much the sovereign credit profile will be affected. S&P currently affirmed India’s rating with ‘BBB-’ with a stable outlook, which tells that India possesses the adequate capacity to meet its financial commitments.
About S&P Global Ratings
•S&P Global Ratings (formerly Standard and Poor’s) is a US-based credit rating agency (CRA) that publishes economic research and performs analysis on commodities, stocks, and bonds.
•S&P issues short-term as well as long-term credit ratings. As a credit rating agency, it issues credit ratings for the debt of public borrowers such as governments and related entities, and for public and private companies.
•The US Securities and Exchange Commission recognizes S&P as a national statistical rating organization among the pool of various credit rating agencies.
•S&P is counted among the three big credit rating agencies, the other two – Fitch Ratings and Moody’s Investors Service.