At a webinar on India Outlook for 2021, Andrew Wood, director, Sovereign & International Public Finance Ratings for Standard & Poor , said, “India will be one of the fastest growing economy in the emerging market space. India’s contraction this pasth year was steep, but a bounce back of 10 per cent, that we are expecting next fiscal year, will put India amongst the fastest growers in 2021. More importantly, we see the Indian economy growing at 6 per cent over medium term, may be slightly higher, and that compares very well to emerging markets all around the world.”
India’s economy has stabilized over recent months, with progressively better manufacturing, services, labor market, and revenue data. The country has exceeded its fiscal deficit target of 3.5 per cent in the current fiscal by a wide margin due to higher spending to stimulate the economy amid the pandemic. India’s general government debt/GDP ratio, which stood at 72 per cent in 2019, has risen to nearly 90 per cent.
Regarding the banking sector, S&P said large capital raising would bolster bank balance sheets and expects capital infusion in state-owned banks to be sufficient to support credit growth. The government recently announced that two more state-owned banks will be privatized. S&P currently has a ‘BBB-‘ rating on India, with a stable outlook.
