Global Credit rating agency Moody's Investors Service has said the re-imposition of curbs to rein in the surge of coronavirus cases will adversely impact economic activity and may dampen market and consumer sentiment.

On Tuesday, Moody's said the second wave of infections in India presents a risk to growth forecast as reimposition of virus management measures will curb economic activity.

Retail and recreation activity across India had dropped by 25 percent as of April 7 compared with February 24, according to Google mobility data. This was mirrored in the Reserve Bank of India's March consumer confidence survey which showed a deterioration in perceptions of the economic situation and expectations of decreased spending on non-essential items.

"However, given the focus on micro-containment zones to deal with the current wave of infections as opposed to a nationwide lockdown, we expect that the impact on economic activity will be less severe than that seen in 2020," said Moody's. India's relatively very young population help mitigates risks. And GDP is still likely to grow in double digits in 2021 given the low level of activity in 2020, it added. On April 11, India recorded its highest daily surge in new coronavirus infections since the start of pandemic, pushing its active caseload further past one million.

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