Incidentally, Moody’s had upgraded India’s rating to Baa2 in November 2017 on expectation that the government would effectively implement key reforms, but it has now drilled holes in the government claims by stating that “implementation of key reforms promised by Prime Minister Modi’s first term has been relatively weak and has not resulted in material credit improvements, indicating limited policy effectiveness”.
With a gradual lifting of the lockdown, except in containment zones, we should see economic activity buzzing again. Though this quarter is mostly “washed out”, we may see some semblance of sanity in the next quarter. The rural economy hasn’t been affected to a large extent, thanks to the recent good harvest. Now, with a normal monsoon forecast, that could boost consumption in the rural economy. The moot question, however, is whether we will bounce back in the third quarter of FY21 based on the “stimulus” package being rolled out in various phases, with yet another instalment coming on Monday. The most important factor, I believe, would be the ingenuity and the “indefatigable spirit” of the Indian entrepreneur, echoing Prime Minister Narendra Modi’s call for “Atmanirbhar Bharat” (self-reliant India) despite being in the most unenviable position.
And stock markets
generally discount an outcome a couple of months in advance. We may have bouts of correction, but markets
seem to have witnessed the bottom in March 2020 unless we see a more ferocious second wave resulting in a fresh lockdown.
The author is an independent market expert. The views expressed here are his own