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In FY 21 Indian economy to contract 9% expects S&P.

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S&P Global Ratings said on September 14 that it was expecting India’s economy to shrink by 9% in the fiscal year ending March 31, 2021, larger than its previous estimate of a 5% contraction, as the country reels under the impact of the COVID-19 pandemic.

The ratings firm joins a host of major banks and ratings agencies, which have made deep cuts to their forecasts on India’s economy following a 23.9% contraction in April-June, as consumer spending, private investments and exports collapsed during one of the world’s strictest lock downs.

S&P’s latest revision comes three months after it made its projection on India’s real GDP for fiscal 2021.

“While India eased lock downs in June, we believe the pandemic will continue to restrain economic activity … As long as the virus spread remains uncontained, consumers will be cautious in going out and spending and firms will be under strain,” S&P said in a note.”The potential for further support monetary support is curbed by India’s inflation worries,” said Vishrut Rana, Asia-Pacific economist for S&P Global Ratings. The Reserve Bank of India has cut policy rates by 115 basis points so far this year.

Retail inflation data, due later in the day, is likely to have stayed above the Reserve Bank of India’s medium-term target range in August for the fifth straight month, according to a Reuters poll.

India’s high deficit also limits the scope for further fiscal stimulus, S&P added. It expects GDP growth of 6% in fiscal 2022 and 6.2% in fiscal 2023.

Moody’s on Friday said it was expecting India’s real GDP to contract by 11.5% in fiscal 2020.

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Covid 19 caused 78% MSMEs & startups in India to reduce workforce in the last 8 months: Survey

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Seventy-eight per cent MSMEs and startups in India have reduced workforce in the last 8 months since the Covid-19 pandemic broke out.
As per a survey by LocalCircles, only 22 per cent startups and MSMEs have the same or increased workforce as compared to the pre-Covid levels.

India’s startups and MSMEs ecosystem went through a torrid time due to the Covid-19 pandemic and the following lockdown. With revenues and operations getting impacted for most businesses, many end up cutting costs and some even shut down temporarily or permanently. Per CMIE, 6 million Indians had already lost white collar jobs in the March – August period.
LocalCircles conducted a survey to understand the startup and MSME pulse on their workforce adjustments due to Covid. The survey received over 7,000 responses from startups, MSMEs and entrepreneurs spread across 104 top business districts of the country.

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