In what is terrible news but comes as no surprise, analysts at Moody’s stated on Friday that the novel coronavirus outbreak will stunt the already battered Indian economy so much so that the country is set to witness 0% expansion in the current fiscal year.
While the rating agency expects the country to bounce back to a 6.6% GDP growth in FY22, it states that India will see no growth financially in 2021.
COVID-19 has also “significantly reduced the prospects of a durable fiscal consolidation,” it said in a report.
“Prolonged financial stress among rural households, weak job creation and, more recently, a credit crunch among non-bank financial institutions have increased the probability of a more entrenched weakening,” the agency noted.
“Lower growth and government revenue generation, coupled with coronavirus-related fiscal stimulus measures, will lead to higher government debt ratios, which we project to rise to around 81% of GDP over the next few years,” Moody’s added.
It is to be seen whether the government follows these measures.