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Indian economy likely to shrink 5% in current fiscal: S&P Global Ratings

09 Jun 2020 Evaluate
Amid the ongoing COVID-19 pandemic, global rating agency S&P Global Ratings in its report titled 'Financial Conditions Reflect Optimism, Lockdown Fatigue Emerges', has said that Indian economy is likely to shrink 5 per cent in the current fiscal, saying the fiscal stimulus worth 1.2 per cent of GDP will not be enough to provide significant growth support.

According to the report, the services sectors, which are large employers, have been severely affected, leading to widespread job losses. It also said that migrant workers have been geographically displaced, and expect it will take some time to unwind this process. The rating agency also noted that there will be supply chain disruptions over the transition period.

However, S&P Global Ratings said the growth will rebound to 8.5 per cent in 2021-22. It projected growth to be 6.5 per cent in 2022-23. The agency further underlined that the central bank has cut policy rates by 115 basis points since February, but policy traction remains low as banks remain unwilling to lend.

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