India's nominal GDP is likely to grow at 19 per cent in FY22 after registering what economists evaluate will be the deepest shrinkage in the country's history in the previous year, according to the finance ministry estimates. Nominal GDP measures a country's gross domestic product (GDP) using current prices, without adjusting for inflation.
N K Singh, chairman of the Fifteenth Finance Commission (FFC) told Livemint that the estimate is a bit more modest as compared to some optimistic assessments that the FFC has received from experts.
Mentioning a presentation made by the finance ministry's chief economic adviser, Krishnamurthy Subramanian, Singh said, "We had to make projections about the rebound from a very low base year.
The Chief Economic Adviser said in a presentation that it could go as high as 19%, while some even said it could be 21% as an extreme case, and others said it could be more modest."
Meanwhile, economists cautioned that although the rebound in the economy in FY22 may look strong, the GDP may still lag behind what was recorded in the year ended March 31, assessed to be Rs 203.4 lakh crore by the National Statistical Office (NSO).
Subramanian had told the publication earlier that while the COVID-19 pandemic may have a negative impact on the Indian economy for some sectors, the country will eventually get back on a high-growth track owing to the structural reforms it is undertaking.
He stated that the reforms by the government "on the agriculture side, on labour, on privatisation" together will boost productivity in the economy and "will help bring back growth."
Meanwhile, the finance ministry hasn't officially divulged its GDP estimates for the current financial year but the majority of economists are now pegging a GDP contraction of over 10 per cent.
Moody's Investors Service projected a 10.6 per cent real GDP growth and 4 per cent retail inflation for FY22, following an 11.5 per cent shrinkage in the current fiscal year, in its latest forecast on September 11.
The finance ministry, in a statement made in Parliament on Friday, said it was unable to submit a medium-term expenditure structure with rolling targets of indicative expenditure for FY22 and FY23 as it is not feasible to get reliable projections of GDP growth at this time because of the ongoing impact of the coronavirus outbreak on the economy.