Fitch Ratings has warned that India’s slow pace of vaccination means that the country could remain vulnerable to further waves of Covid-19 even once the current surge subsides. Just 9.4% of the population had received at least one vaccine dose as of May 5, it pointed out. Last month, the firm had said that the second pandemic wave in the country could ‘delay’ but not ‘derail’ the economic recovery. However, it has now expressed concerns about the adverse implications of a longer disruption. “We expect the shock to economic activity from the latest wave of the pandemic in India to be less severe than in 2020, even though caseloads and fatalities are much higher. The authorities are implementing lockdowns more narrowly, and companies and individuals have adjusted behaviour in ways that cushion the effects,” Fitch said in a note on Monday. “Nonetheless, Indicators show activity dropped in April-May, which is likely to delay the country’s recovery, and the number of newly recorded cases remains extremely high. There is a risk that disruption could persist longer and spread further than our baseline case assumes, particularly if lockdowns are introduced in more regions, or nationwide,” it added. India’s latest COVID-19 infections’ wave would add to risks for financial institutions by sapping near-term momentum from the economic recovery and the central bank’s relief measures, announced last Wednesday, would postpone the recognition of risky assets, the rating firm said. “Measures announced by the Reserve Bank of India (RBI) on May 5 will provide some relief to FIs in the next 12-24 months, but largely at the expense of postponing the recognition and resolution of underlying asset-quality problems,” it said on Monday. In April, the firm had re-affirmed India’s sovereign credit rating at ‘BBB-’/Negative. “At the time, we said that the surge in the virus posed downside risks to the FY22 outlook, which may delay — though not derail — India’s recovery,” it recalled. Fitch has forecast a 12.8% GDP growth in 2021-22 which will moderate to 5.8% in 2022-23, from an estimated contraction of 7.5% in 2020-21. However, the recent surge in COVID-19 cases poses increasing downside risks to this year’s outlook, it had warned in April.