[ad_1]
This follows a record drop of almost 24% in GDP during the April-June period, the first quarter of India’s fiscal year.
“In order to contain the spread of the Covid-19 pandemic, restrictions were imposed on economic activities not deemed essential during [the first quarter]India’s statistics ministry said in a statement on Friday. “Although the restrictions have been gradually lifted, there has been an impact on economic activities.”
As the manufacturing sector returned to growth, the service sector suffered a second consecutive double-digit decline. Public consumption also fell sharply partly due to a “Inadequate fiscal response to the crisis,” said Shilan Shah, Indian senior economist at Capital Economics.
AstraZeneca’s positive preliminary results on its vaccine candidate are good news for India, given that it has one of the largest orders of any country and the vaccine will be produced locally, Shah added.
The vaccine is “the most encouraging sign yet that India has a path to end its Covid-19 epidemic and the social distancing which continues to weigh on the economy,” he said in a research note.
Both economists said India’s economy has a tough road ahead. “The lack of a comprehensive fiscal response … will hamper future growth,” Kishore said.
Investors will pay close attention to this when India’s central bank meets next week.
“Under these circumstances, monetary policy is likely to remain very loose for the foreseeable future, and we believe the markets are too belligerent to expect modest rate hikes in 2022,” Shah added.
[ad_2]
Source link