As per S&P Global Ratings, India is expected to grow at the rate of 10% in the next financial year. The forecast has been made taking into consideration the economic recovery.
Key Points
- This forecast is way below the 11% growth projected by the Economic Survey for the fiscal year 2022.
- The projected rebound in the financial year 2022, however, comes on a lower base, with the Indian economy projected to contract 7.7% this fiscal.
- For the recovery in growth in the next fiscal, S&P relied on factors like flattening of the Covid-19 infection curve, good agriculture performance, and a pickup in government spending.
- However, S&P warned that India needs many things to be right for its recovery to continue.
- The agency also said that India needs to quickly vaccinate most of its 1.4 billion people.
- S&P expects that performance of India’s banking sector will start improving materially in the fiscal year 2023.
- Credit cost will likely remain elevated at 2.2-2.7% and weak loans ratio is estimated at 12% of gross loans.
As per the agency, a sustained earnings rebound is key for ratings to stabilize. The Indian economy is still facing important risks as it transitions from stabilization to recovery and the country faces a permanent loss of about 10% of GDP output versus its pre-pandemic path.
