Moody’s Analysis: India to meet more prolonged risk to Consumption, Jobs
Moody’s Analysis: India to meet more prolonged risk to Consumption, Jobs
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Global integrated risk assessment firm Moodys said India to face more extended risk to consumption and employment. With restrictions expected to be eased even more gradually than previously assumed, there is an increasing risk that the hit to consumption and employment will be more prolonged, Moodys Analytics said.

On the production side too, labour shortages and sourcing constraints are impediments that will not only weaken domestic supply, but also exacerbate costs and fuel inflation pressures in the short term, it added. Under these circumstances, the RBI will continue to maintain an accommodative stance as it prioritizes recovery and financial stability, but is unlikely to go significantly beyond mobilizing additional liquidity to support cash-strapped enterprises.

Moody's Analytics said the RBI is therefore likely to maintain the policy rate at 4% until August, but follow up its support with another round of quantitative easing if required and possibly an extension of its current loan restructuring program to contain a sharp decline in asset quality. The near-term outlook for the Indian economy is still mired in uncertainty. Most states have extended lockdowns by a few weeks.

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