The gradual loosening of strict containment measures has provided a slight boost to activity, but with new COVID-19 cases still rising sharply, the recovery is likely to be slower and bumpier than in places where the virus has been controlled. Meanwhile, the Supreme Court and the RBI are embroiled in a dispute over interest accrued on loans under the six-month moratorium. It’s unclear how the matter will be resolved but our view is that an interest waiver would do more damage to an already-fragile banking sector.
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