India’s economy to rebound, grow 9.3% in FY22: Moody’s

New Delhi: Indian economy would rebound in the current fiscal ending March 2022 and clock a growth of 9.3 per cent, but a severe second Covid wave has increased risks to India’s credit profile and rated entities, Moody’s Investors Service said on Tuesday. Moody’s, which has a ‘Baa3’ rating on India with a negative outlook, said it expects a decline in economic activity in the June quarter due to reimposition of lockdown.

Credit offtake by micro, small and medium enterprises (MSMEs) increased by 3 per cent in the last fiscal year (FY21) against a marginal de-growth in FY20. However, the second Covid wave has hit incremental credit growth in April this year.

At Rs 12.43 lakh crore at the end of FY21, the total bank credit outstanding to MSMEs grew 3.19 per cent. At the end of the previous fiscal, the outstanding had degrown 0.21 per cent.

While micro and small enterprises (MSEs) registered a growth of 4.22 per cent in credit offtake in FY21, outstanding by medium enterprises grew 5.14 per cent. The manufacturing sector recorded a growth of 3.07 per cent in FY21 against a degrowth of 6.15 per cent in the previous year. Services bettered growth from 3.89 per cent in FY20 to 4.83 per cent in FY21.

Some of the key policy measures provided by the government during the pandemic led to the growth in bank credit. This includes the Emergency Credit Line Guarantee Scheme.

However, since the second wave of the pandemic started hitting industries, there has been a decline of bank credit.

In April 2021, incremental bank credit to the MSME sector fell by 3.2 per cent compared with a negative growth of 0.2 per cent in April 2020.