S&P Global Ratings said on Tuesday that the Indian economy is on track to recover in the next financial year starting April 1. The agency said that the continued good performance of the agricultural sector, decreasing pace of transition of Kovid-19 and accelerating government expenditure are supporting the economy.
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S&P said that India needed to correct many things to continue the revival. India needs to vaccinate its 1.4 billion population quickly. S&P stated in a report titled ‘Cross Sector Outlook: India’s Escape from Kovid,’ Taking this more contagious form of Kovid-19 and disabling vaccine-borne immunity could threaten this revival.
The budget for FY 2021-22 will also support revival
Apart from this, the financial measures taken at the global level are also at risk of being withdrawn prematurely. The agency said that the budget for FY 2021-22 would also support revival through higher-than-expected expenditure. India’s growth prospects are critical to its ability to handle the high deficit associated with its more aggressive fiscal stance.
10% shock to GDP due to epidemic
The economy is steadily moving towards revival and still faces significant risks. We estimate that India is going to suffer a permanent loss on the production front, compared to the pace before the epidemic, which could be long-term equivalent to around 10 percent of GDP.