With decline in number of fresh COVID-19 cases and easing of restrictions, India’s gross domestic product (GDP) will grow at 8.5 per cent in FY2021-22, according to credit rating agency Icra Ratings.
“The impact of the second wave of COVID-19 and the ensuing state-wise restrictions was seen across a variety of high frequency indicators in April-May 2021. Now that the fresh cases have moderated, and restrictions are being eased, we have placed our baseline GDP growth forecast for FY2022 at 8.5 per cent,” PTI quoted ICRA Chief Economist Aditi Nayar as saying.
Icra said if vaccine coverage is accelerated following the re-centralised procurement policy, the GDP expansion in FY2022 could be as high as 9.5 per cent, with a widening upside in Q3 and Q4 of FY2022.The country’s GDP contracted by 7.3 per cent in FY21. Earlier in June, the Reserve Bank of India (RBI) had projected real GDP growth at 9.5 per cent in 2021-22.
The rating agency expects a prolonged negative impact of the second wave on consumer sentiment and demand, with healthcare and fuel expenses eating into disposable income, and lower pent-up/replacement demand in FY22 compared to FY21.