India’s GDP Expected to Grow at 9% in FY22, FY23

The Indian economy is expected to maintain a real gross domestic product (GDP) growth of 9% in FY22 and FY23 amid the Omicron uncertainty, ratings and research firm Icra Ltd said. Available data for the third quarter does not offer convincing evidence that the Monetary Policy Committee’s criteria of a durable and sustainable growth recovery has been met, to confirm a change in policy stance to neutral in February 2022, it said. “The data for October-November 2021 does not point to a broad-basing of the growth recovery in India. After the higher-than-expected net cash outgo sought under the second supplementary demand for grants, the pace of actual government spending is likely to determine whether the pace of GDP growth meaningfully exceeds 6.0-6.5% in Q3 FY22,” Icra chief economist Aditi Nayar said. Like in the second quarter, volumes of seven of the 13 high-frequency indicators rose above their pre-covid levels in October-November 2021, including GST e-way bills generation (+26.7%), non-oil exports (+26.0%), rail freight traffic (+20.2%), Coal India Ltd output (+15.7%), electricity generation (+9.9%), petrol consumption (+6.4%), and ports cargo traffic (+4.0%). But the volumes of six of the 13 high frequency indicators contracted in October-November 2021 relative to October-November 2019, in line with the trend in Q2 FY22, suggesting that the recovery is yet to be broad-based. The subset trailing pre-covid level in October-November 2021, includes scooter production (-25.1%), domestic air passenger traffic (-22.8%), vehicle registration (-22.8%), diesel consumption (-6.8%), passenger vehicle production (-3.1%), and motorcycle production (-2.6%). The GDP for the second quarter of the financial year grew by 8.4% from a year ago, one of the fastest rates among major economies.