Indian economy on track for strong growth after second Covid wave, S&P says

International ratings agency S&P has said India’s economy is “picking up steam” after stalling during the second wave of the coronavirus pandemic in May and June.

According to the agency, growth will improve over the July-September quarter on the back of such indicators as goods and service tax (GST) receipts and motor vehicle sales. 

The economy is expected to post 9.5% growth in the current fiscal year, followed by 7% expansion in the next year, S&P said.

“Given India’s weak fiscal settings and high stock of debt around 90% of GDP, the nominal GDP growth is going to be very important to prevent any further erosion of fiscal settings in the country and to enable some degree of fiscal consolidation going forward,” said S&P Global Ratings Director (Sovereign) Andrew Wood.

S&P Economist (Asia Pacific) Vishrut Rana said earlier that “the second wave of the pandemic has been pretty costly to economic activity. Households have been affected... households are going to be repairing their balance sheets and withholding from spending, which means activity will remain below trend once the recovery gets under way.”

He added: “Looking ahead we continue to expect fairly strong economic growth going into calendar Q3 and Q4.”

Statistics showed the Indian economy grew by an annual 20.1% in the April-June quarter.

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