India Gears Up for Economic Recovery in FY22

India Gears Up for Economic Recovery in FY22

The S&P Global Ratings has revealed that India has been on track for an economic recovery by FY22 with an estimated economic recovery at about 10 percent in FY22.

Remarkably good agriculture performance, flattening of COVID-19 infection curve has been supporting the economy and aiding the government to revive the economy by spending is supporting the economy, states the rating agency.

S&P Global Ratings also expects India's banking system's performance to start improving materially in FY23. The report further observed that Indian economy still faced risks as it transitioned from stabilisation to recovery.

Emergence of more contagious COVID-19 variants with the potential to evade vaccine-derived immunity a major risk to recover and Possibility of early withdrawal of global fiscal stimulus also poses a major risk to India's recovery, the ratings agency noted. It, however, noted that India’s near-term prospects are positive.

The rating agency also reveals, Indian government's recently released budget to also support economic recovery and improving growth prospects are critical to its ability to sustain higher deficits.

Pickup in government spending supporting the economy, it added India faces an estimated permanent loss of about 10 percent of GDP output versus its pre-pandemic path, S&P Global Ratings states.