India's second wave is a healthcare and an economic challenge, with the wave threatening economic growth, rating agency CRISIL has stated in its latest report.
According to the rating agency, base GDP growth forecast for fiscal 2022 is at 11%, with risk firmly tilted downwards. The rating agency has outlined two scenarios?
Scenario 1 -Moderate downside: GDP growth drops to 9.8%, assuming second wave peaks by May-end
Scenario 2 -Severe downside: GDP growth drops to 8.2%, assuming second wave peaks by June-end.
"The Lockdowns/restrictions less restrictive for economic activity, but increasing in number. Caseloads spreading to rural areas where healthcare infrastructure is weak and high frequency indicators show softening. The Global waves suggest impact on manufacturing activity is less devastating as vaccination rollout gathers pace and people 'learn to live with the virus. External demand is likely to support India's merchandise exports," the rating agency has noted.
According to CRISIL, India Inc's revenue growth projected at 15% for fiscal 2022 on a low base of two years in base case and moderate scenario; in alternate severe scenario, pegged at 10-12%.
"Rising costs could pose headwinds to companies as they recover in specific sectors," the rating agency has stated.
Most agencies have reduced their GDP forecasts for FY 2021-22, with not very encouraging commentary. "There is a risk that disruption in India could persist longer and spread further than its baseline case assumes, particularly if lockdowns are introduced in more regions, or nationwide," global rating agency Fitch said recently.