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BusinessIndia’s GDP likely to sustain 9% growth rate in FY 22, FY 23

According to a survey, the country’s real gross domestic product (GDP) will likely sustain a 9 percent growth rate in fiscal 2022 and 2023, despite concerns over the Omicron variation of COVID-19.

The Indian economy expanded by 8.4% in the second quarter of this fiscal year, compared to 20.1 percent in the April-June period.

“We are keeping our prediction of 9% GDP growth in FY2022, with a clear K-shaped divergence between the official and informal sectors of the economy, with the large gaining at the expense of the small,” says the report.

In the research, domestic rating agency Icra Ltd Chief Economist Aditi Nayar stated, “Looking ahead, we forecast the economy to retain a similar 9% growth in FY2023.”

By March 2022, she anticipates the percentage of adults who have been double-vaccinated to reach 85-90 percent.

While the introduction of booster doses and vaccines for the 15-18 year old age group is encouraging, it needs to be seen whether all existing vaccines can provide adequate protection against the new Omicron form in order to prevent a third wave in India, according to Nayar.

In any event, new limits imposed by numerous jurisdictions to combat the spread of COVID-19 may temporarily halt economic recovery in Q4 FY2022, especially in contact-intensive industries, she warned.

Nayar, on the other hand, believes that the growth in FY2023 will be more significant and tangible than the base effect-driven increase in FY2022.

“Based on our GDP growth assumptions if the COVID-19 pandemic had not emerged vs. the actual shrinkage that occurred in FY2021 and the expected recovery in the next two years,” she said, “the net loss to the Indian economy from the pandemic during FY2021-23 is estimated at Rs 39.3 lakh crore in real terms.”

According to the rating agency, the available data for Q3 FY2022 does not provide convincing evidence that the Monetary Policy Committee’s (MPC’s) criteria of a durable and sustainable growth recovery have been met, which would support a change in the Monetary Policy stance to neutral in February 2022.

Rising demand, it estimates, will push capacity utilisation above the critical barrier of 75% by the end of 2022, triggering a broad-based increase in private sector investment activity in 2023.

The agency also forecasts increased government spending in 2022 as a result of the increased visibility of tax revenue increases.

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