New Delhi. Global rating agency S&P Ratings (Standard and Poor’s) has said that despite a big fall in FY 2021, there are signs of a strong recovery in India. With this, India’s GDP growth could be close to 8.5 percent in FY 2022. However, the agency has said that there is a need to improve the weak Financial Sector and Labor Market. If this is not done then recovery may be affected. The agency has projected a 5% GDP contraction in the current financial year.
India’s Rating Unchanged at ‘BBB-‘
The rating agency has kept India’s Sovereign credit ratings unchanged at ‘BBB-‘. The agency has confirmed its unscheduled ratings on India’s foreign and local currency as ‘BBB-‘ for the long term and ‘A-3’ for the short term. Also, S&P Global Ratings has stated that India’s outlook is stable on long-term ratings. The rating agency said in a statement on Wednesday that the stable scenario reflects our expectation that India’s economy will improve after the COVID-19 epidemic is halted and the country will maintain its net external position.
Fiscal Deficit Estimated to be 11% of GDP in 2021
S&P said that the recent measures taken by the Government of India pave the way for constructive policymaking. But lower revenue will continue to weaken India’s fiscal situation. The agency said that due to the Coronavirus epidemic it would be difficult for the government to take strict steps to raise revenue. In such a situation, India’s Fiscal Deficit could be 11% of GDP in FY 2021.
Fitch Ratings also forecast 9.5% Growth
Apart from S&P, Fitch Ratings also forecast an improvement in the Indian economy in FY 2022. The agency said on Wednesday that the Indian economy will rebound after the contraction in the current financial year and will have a faster growth rate of 9.5 percent in the next financial year. However, the financial sector will have to be reformed for a faster growth rate. Fitch ratings forecast a contraction in the economy in the current fiscal year due to the Coronavirus epidemic. The agency has projected a 5% contraction in GDP in the current financial year.
GDP Growth at 4.2 percent in FY 2020
The country’s Gross domestic product (GDP) growth rate during the January-March quarter has been 3.1%. However, GDP growth during the whole year was 4.2%. Similarly, the Gross Value Added (GVA) has been 3.9 percent. According to data from the Central Statistical Department, the growth rate of GDP in the October-December quarter was 4.7%. Whereas during the entire year of 2019, this growth rate was 6.1%.