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Following Moody’s take on the Indian economy, S&P Global Ratings said that the Asian nation is likely to see a 9% contraction in its GDP in the fiscal year (FY) 2021 due to COVID-19.”

Additional points

“Rising COVID-19 cases in India will keep private spending and investment lower for longer.”

“Potential for further monetary support is curbed by India’s inflation worries.”

“It now expects the Indian economy to contract by 9% in fy21 due to COVID-19 vs. the previous forecast of 5% contraction.”

“Expect a permanent loss in output of 13% over the next three years for India.”

“India’s high deficits limit the scope for fiscal stimulus.”

“It expects economic growth of 6% in FY22 and 6.2% in FY23 for India.”

Market reaction

USD/INR fails to react to the above headlines, now trading flat around 73.45.