economy

Economy poised to grow at 9.2% in FY22

Economy poised to grow at 9.2% in FY22

The Indian economy may grow at 9.2% in the year to 31 March, powered by agriculture, manufacturing, mining and construction, the government’s statistics office said, rebounding from a 7.3% contraction in the previous year. In its first advance estimate of national income for 2021-22 released on Friday, the National Statistical Office (NSO) estimated India’s real GDP in the current fiscal year at ₹147.54 trillion, against the provisional estimate of ₹135.13 trillion in the previous fiscal. This estimate, however, does not capture the possible economic impact of the third wave of covid-19, and the numbers could be revised after a fresh assessment later. The NSO’s advance estimate serves as an essential input for the finance ministry as it prepares the Union budget for FY23. According to the latest estimate, real GVA (gross value added) at basic prices is estimated at ₹135.22 trillion in FY22, against ₹124.53 trillion in FY21, a growth of 8.6%. The NSO estimates showed growth in agriculture, forestry and fishing (3.9%); mining and quarrying (14.3%); manufacturing (12.5%) and construction (10.7%). GVA at basic prices from electricity, gas, water supply and other utility services sector is expected to grow at 8.5%. Trade, hotels, transport, communication and services related to broadcasting may grow at 11.8%, while financial, real estate and professional services at 4% and public administration, defence and other services at 10.7%. The statistics ministry said these advance estimates provide early projections for FY22 and were likely to be revised if and when the government takes measures to contain covid-19. “Actual performance of various indicators, actual tax collections and expenditure incurred on subsidies in the following months, fresh relief measures for vulnerable sections (such as providing free foodgrain which have now been extended till March 2022) and other measures, if any, taken by the government to contain the spread of covid-19 would have a bearing on subsequent revisions of these estimates, the ministry said. Economists noted that the projections did not consider the possible impact of an Omicron wave, with some expecting a mild downside to the forecast numbers. “Amid the ongoing uncertainty, we currently peg the impact of Omicron on GDP growth in Q4 FY22 at around 40 bps, posing a mild downside to our FY22 GDP growth forecast of 9.0%, said Aditi Nayar, chief economist at ICRA Ltd, noting the projection to be in line with its estimates. She said the widening restrictions triggered by Omicron would thwart the nascent recovery in contact-intensive services, despite high vaccine coverage. After a 6-6.5% expansion in the third quarter of FY22, GDP growth is set to slow to less than 5% in the current quarter due to Omicron, she said. Nayar further highlighted the weak performance of private final consumption expenditure and trade, hotel, transport, communication, etc., which are expected to trail their FY20 levels by 2.9% and a considerable 8.5%, respectively, underscoring the continuing impact of covid-19 on the Indian economy. “The estimate does not take into account the covid impact, and hence, there can be a downward bias to this number, Madan Sabnavis, chief economist at Bank of Baroda, concurred, adding the estimates were close to the bank’s projections of 9.3%. He added that a growth of 9.2% in FY22 would mean just 1.3% growth over FY20, indicating that the economy would have just about recouped the loss in GDP last year. “Based on this number, the RBI will probably retain its earlier stance and not revise any of the rates. In fact, the accommodative stance will continue, and the hike in reverse repo rate will be put off, he said. Download.

economy 2022-01-08 Livemint