Amidst the constant bad news for the Indian economy, a piece of good news has emerged. US credit rating agency Fitch Ratings has stated in its recent report that the Indian Economy is expected to hit a tremendous boom during the next financial year.
Fitch Ratings, the world’s third-largest credit rating agency in the world, said in its recent report that the Indian economy is expected to grow at a rate of 9.5 percent in the next financial year that is 2021-22.
Corona virus pandemic
The statement of Fitch Ratings released in a report on Wednesday. Fitch Ratings has predicted that the Indian economy may report a decline of up to 5 percent in the current fiscal year 2020-21. The cause of this major decline is most importantly the coronavirus pandemic that led to the severe lockdown across the nation. The Fitch Ratings issued an APAC sovereign credit overview on Wednesday which estimated the economies of the Asia-Pacific region.
GDP growth will come back on track
According to the report, after the global crisis, the Indian economy will achieve higher growth rates than other countries in the “BBB” category. It stated that if India’s Financial sector does not go down by 2021-22 then it will witness a growth of 9.5 percent.
It stated, “The pandemic has drastically weakened India’s growth outlook and laid bare the challenges caused by a high public-debt burden.”
Largest lockdown tenure
Fitch Ratings referred to the countrywide lockdown in India that was implemented on March 25. It stated that the country has the largest lockdown load, stopping almost all economic activities. The lockdown was then extended continuously which began to open from May 4 with some conditions. But the number of coronavirus cases in the country is continuously increasing.
Measures by Indian government and RBI
The measures taken by the Central government and the Reserve Bank of India to improve the condition of the economy are also mentioned in the report of Fitch ratings. The RBI made monetary policy easier by cutting down policy rates. Apart from this, arrangements were made to increase liquidity through long term repo operations.
At the same time, the Central government announced a relief package worth 20 Lakh crore equal to 10 percent of GDP. Government debt was already at 70 percent of GDP in 2019-2020, much higher than the average of 42 percent of countries rated ‘BBB’. But now public’s debt/GDP ratio is expected to increase to 84 percent of GDP in 2020-21.