Moody’s Investor Service on Tuesday has lowered its growth forecast for India in the current fiscal to 9.3 per cent from 13.7 per cent because of the second wave of the coronavirus running amock in the country.

Moody’s reiterated its lowest investment grade “Baa3” rating for the country with a negative outlook.

“As of now, we expect the negative impact on economic output to be limited to the April-June quarter, followed by a strong rebound in the second half of the year. As a result, we have revised our real, inflation-adjusted GDP growth forecast down to 9.3 per cent from 13.7 per cent for fiscal 2021 and to 7.9 per cent from 6.2 per cent in fiscal 2022. Over the longer term, we expect growth of around 6 per cent thereafter,” Moody’s said.

On the fiscal front, Moody’s expects the renewed surge in the virus to contribute to a marginal shortfall in revenue and a redirection of spending toward healthcare and virus response relative to what the government budgeted in February.

Business activity drops to June 2020 levels

Japanese brokerage Nomura on Tuesday cut India’s GDP growth estimate for the current 2021-22 fiscal to 10.8 per cent from the earlier 12.6 per cent, blaming the impact of the second wave-induced lockdowns.

It said the activity levels have dropped further to 64.5 per cent of the pre-pandemic levels in the week to May 9 according to a proprietary index, after a further 5 percentage points drop in the week. The activity levels, at present, are on a par with those seen in June 2020.