Moody’s Investors Service in its latest report has forecast a strong recovery in economic growth in India.
India GDP Growth: Moody’s Investors Service in its latest report has forecast a strong recovery in economic growth in India. It has projected the country’s GDP growth to be 9.3 percent and 7.9 percent in FY 2022 and FY 2023, respectively. Moody’s analyst Shweta Patodia said that rapid progress in corona vaccination will support the recovery in India’s economic activity.
Moody’s further said that recovery is coming after the easing of restrictions related to the epidemic in customer demand, spending and manufacturing. These trends, which include higher commodity prices, will lead to significant growth in the EBITDA of rated companies over the next 12 to 18 months.
Vaccination picks up pace after second wave: Moody’s
Record vaccination figures were recently achieved in India. Moody’s has mentioned that after the second wave, vaccination has gained momentum in India. He said that about 30 percent of India’s population has now been vaccinated with both doses. Whereas, at least one dose has been applied to about 55 percent of the population. He said that better vaccination coverage has increased the confidence of the customers.
Moody’s said that, however, there is a risk of a fall in consumer sentiment if the country faces another wave of Kovid-19, which will take a big blow to economic activity and consumer demand. Due to this, the EBITDA growth of Indian companies can come down to below 15 to 20 percent in the next 12 to 18 months.
Moody’s expects investment to increase due to these reasons
Speaking on growth, Moody’s said rising consumption, India’s emphasis on domestic manufacturing and better funding conditions will also support new investments. But it also warned that delays in government spending, energy shortages reduce industrial output and lower commodity prices could impact earnings.
The Reserve Bank of India has ensured that interest rates in India remain at record low levels and has maintained a moderate stance to boost growth. Moody’s said that the cost of funding will come down due to lower interest rates. Lower interest rates will also help in fresh capital investment, as demand will continue to grow.
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