The latest wave of COVID-19 cases in the United States, Europe and parts of Asia has led to renewed restrictions on activity, highlighting the continued risks to growth posed by the pandemic.
"The number of newly identified cases per day continues to trend lower in India, but it remains high and a successful vaccine rollout will be important to sustain economic recovery," he said.
Fitch said India is unusual among emerging markets in having secured pre-orders of various vaccines sufficient to cover a population-wide programme. It has pre-ordered 1.6 billion vaccine doses, including 500 million of the Oxford/AstraZeneca vaccine through a local producer.
Distribution should allow social distancing restrictions to be eased over time and will underpin sentiment.
Nevertheless, said Fitch, the logistical challenges of the rollout mean that one does not expect vaccines to reach a majority of the population over the next 12 months and regional shutdowns will remain a risk in the next few months while the virus is still spreading.
More structural problems with the vaccination drive like delays beyond baseline assumptions or issues with vaccine efficacy could also pose downside risks to the forecasts.
Even if vaccination proceeds smoothly, the coronavirus recession has inflicted severe economic scarring. The need to repair balance sheets, increased caution about long-term planning and company closures will dampen corporate investment in the months ahead.
Furthermore, said Fitch, increased financial-sector weakness -- amid deteriorating asset quality -- will hold back credit provision. The failure of Lakshmi Vilas Bank in November underlined the challenges in financial sector.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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