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India's recovery gathers pace on good agri show,
falling Covid cases: S&P
India faces a permanent loss of output versus its pre-pandemic path, suggesting a long-term production
deficit equivalent to about 10 per cent of GDP
Global rating agency Standard & Poor's (S&P) said India is on track for an economic recovery in the fiscal year
ending March 2022 with consistently good performance in agriculture, a flattening of the Covid-19 infection curve,
and a pick-up in government spending are all supporting the economy.
However, the economy still faces major risks as it transitions from stabilisation to recovery. India faces a
permanent loss of output versus its pre-pandemic path, suggesting a long-term production deficit equivalent to
about 10 per cent of Gross Domestic Product (GDP).
India needs many things to be right for its recovery to continue. Most significantly, the country needs to quickly and
thoroughly vaccinate most of its 1.4 billion people, S&P, in a report titled, "Cross-Sector Outlook: India's Escape
From Covid," said.
The emergence of yet more contagious Covid-19 variants with the potential to evade vaccine-derived immunity
present a major risk to this recovery. As does the possibility of early withdrawal of global fiscal stimulus, it said.
Near-term prospects are positive. With a sustained decline in national confirmed Covid-19 cases allowing for a
gradual relaxation of formerly stringent epidemic control measures, high frequency economic indicators continue to
The government's recently released Budget will also support the recovery, with higher than previously expected
expenditures for fiscals 2021 and 2022. India's improving growth prospects are critical to its ability to sustain the
higher deficits associated with its more aggressive fiscal stance, S&P added.
Localised containment measures in India are replacing nationwide lockdowns. This has rejuvenated demand,
removed supply bottlenecks and labour shortages, supporting a sharp recove