The government is reluctant to support but weak support suggests a relation with the previous year deficit, to control the situation but the steeper fall will result in weak revenue generation which might see weak support in further areas.
India’s long-term rating has affirmed at ‘BBB’ grievance of overall stability and the short-term rating was held at ‘A-3’. The Indian economy will end up being small. The fiscal year 2021 will face a record fall on the account of the global COVID-19 pandemic. Though the real GDP will recover significantly in FY 22.
India has the second-highest number of virus cases despite seeing one of the strictest lockdowns. Cases are still on the rise as the economy has started to open up slowly. It is expected that the economy of India will be normal in the fiscal year 2022, resulting in a growth of about 10 percent.
The government’s direct financial support to the GDP is 1.2 percent so far comparing to the 3 percent on an average in the other developing economies. Although additional stimulus may help to avert a steeper downturn this year, it would also further strain the government’s weak finances. Although additional stimulus may help to avert a steeper downturn this year, it would also further strain the government’s weak finances. The country’s fiscal deficit is likely to rise to about 12.5 percent of GDP this year, largely driven by much weaker revenue generation and the government’s net indebtedness is set to exceed 90 percent of GDP this year compared to just over 70 percent in fiscal 2020.
