Indian economy to shrink 9% in fiscal 2020-21: S&P Global

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S&P Global Ratings is expecting India's economy to shrink by 9 per cent in fiscal 2020-21, higher than its previous estimate of a 5 per cent contraction. "While India eased lockdowns in June, we believe the pandemic will continue to restrain economic activity ... As long as the virus spread remains uncontained, consumers will be cautious in going out and spending and firms will be under strain," it said in a note.

Rising COVID-19 cases would keep private spending and investment lower for longer.

"The potential for further support monetary support is curbed by India's inflation worries," Vishrut Rana, Asia-Pacific economist of the company was quoted as saying by a news agency.

The Reserve Bank of India has cut policy rates by 115 basis points so far this year.

India's high deficit also limits the scope for further fiscal stimulus, S&P added. It expects a gross domestic product (GDP) growth of 6 per cent in fiscal 2021-22 and 6.2 per cent in 2022-23.