IMF scaling down India’s growth forecast is yet another grim reminder of the ongoing crisis and the tough recovery road ahead
The sovereign credit ratings on India reflect the economy's above-average long-term real GDP growth, sound external profile, and evolving monetary settings, S&P Global Ratings stated.
GDP growth in the current fiscal was estimated to be in double digits initially, but a severe second wave of pandemic has led to various agencies cut growth projections.
Last week, the Reserve Bank of India (RBI) had projected real GDP growth at 9.5 per cent in 2021-22.
The government may be waiting for the lockdowns to end before they can announce specific measures for the revival, which can have the best multiplier effect.
Official data released on Monday said the economy grew at faster than expected at 1.6 per cent for the fourth quarter of FY21, resulting in a contraction of 7.3 per cent for the entire fiscal.
Jhunjunwala, who is reported to be the largest individual investor in the domestic markets, also said the level of taxation on the equity markets is "reasonable" given the socio-economic conditions in the country.
Core inflation is likely to see a more controlled rise in 2021, although food-price or fuel-driven inflation can become a recurring factor, weighing on household disposable income.
In 2019, Prime Minister Narendra Modi envisioned to make India a $5 trillion economy and global power house by 2024-25.
The agency had earlier forecast a 7.4 per cent contraction in 2020-21 GDP numbers.
He hoped that the global rating agencies would retain India's sovereign rating at the existing levels.
With regard to inflation, RBI Governor Shaktikanta Das said vegetable prices are expected to remain soft in the near term
Faced with enormous uncertainty, India adopted a strategy of Bayesian updating to continually calibrate its response while gradually unlocking and easing economic activity.
Fitch ratings said the revival of the reform agenda is among the Indian government's policy responses to the Covid-19 pandemic shock
The report also believes that it would take seven quarters from the fourth quarter of FY21 for GDP to reach the pre-pandemic level in nominal terms.
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