MUMBAI, Sept. 14 (Xinhua) -- Indian economy is likely to tank by 9 percent in the current fiscal year 2020-21 (April-March) led by rising COVID-19 cases that will cut private spending and investments for a long duration, said a statement by S&P Global Ratings on Monday.
In May, the world's leading provider of independent credit risk research, S&P Global had estimated a contraction by 5 percent for Asia's third largest economy from the pandemic. But since then, India ranks the second after the United States for the total number of COVID-19 cases.
"One factor holding back private economic activity is the continued escalation of the COVID-19," said Vishrut Rana, Asia-Pacific economist for S&P Global Ratings, which publishes over 1 million credit ratings on debt issued by sovereign, municipal, corporate and financial sector entities globally.
The pandemic and tight lockdown measures knocked private consumption by 26.7 percent while fixed investment sunk 47.1 percent, the statement said.
Pandemic cases in India has spiraled to 90,000 per day for the past week, according to the World Health Organization (WHO).
India's fiscal stimulus announced so far amounts to 1.2 percent of the GDP, which is lower compared to global averages. The International Monetary Fund (IMF) estimates that on average comparable stimulus measures across the global emerging markets have been about 3.1 percent of the country's GDP, the statement said.
Expecting a larger permanent loss in output of 13 percent over the next three years, the rating agency expects India's economic growth at 6.0 percent in fiscal 2022 and 6.2 percent in fiscal 2023, which prior to the pandemic was estimated at 6.5 percent for the current year of 2020-21.
Last week, ratings agency Moody's and Fitch had projected 11.5 percent and 10.5 percent contraction respectively in India's economic growth in the current fiscal.