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India to face more protracted risk to consumption and jobs, warns Moody’s Analytics

By on June 4, 2021 0

New Delhi: With restrictions to be eased even more gradually than expected, there is a growing risk that the blow to consumption and employment will be more prolonged, Moody’s Analytics said. Also Read – Delhi Unlock 2021 Begins: Migrant Workers Start Returning to Work

On the production side too, labor shortages and supply constraints are obstacles that will not only weaken domestic supply, but also exacerbate costs and fuel short-term inflationary pressures, he said. -he adds. Also Read – Taarak Mehta Ka Ooltah Chashmah To Enter Guinness Book Of World Records As “Oldest Indian Sitcom”

Under these circumstances, the RBI will continue to maintain an accommodative stance as it prioritizes recovery and financial stability, but it is unlikely to go far beyond raising additional liquidity to support businesses in the future. short of cash. Read also – Viral video: man gives golgapas to cow and calf, adorable video wins Internet | Watch

Moody’s Analytics said the RBI is therefore likely to keep the policy rate at 4% until August, but continue its support with another round of quantitative easing if needed and possibly an extension of its current loan restructuring program. to contain a sharp drop in asset quality. .

The short-term outlook for the Indian economy is still mired in uncertainty. Although daily cases are now on a downtrend (to less than half of its peak of 400,000 cases in early May), most states have extended localized lockdowns by a few weeks.

The RBI, however, reduced its growth forecast to 9.5% for fiscal year 2021-22 in light of the strong resurgence, which has led most states to impose lockdowns. The new cases are on a downward trend, but with restrictions that are likely to be eased only gradually, the sharp slowdown in domestic demand is expected to weaken the recovery beyond the June quarter, Moodys’ Analytics said.

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