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ICRA raises FY22 GDP forecast to 9%; cites 'brightening' prospects

ICRA raises FY22 GDP forecast to 9%; cites 'brightening' prospects

India is benefitting from the rapid ramp-up in Covid-19 vaccine administration, healthy advance estimates of kharif output and the withdrawal of expenditure management measures related to the government's spending, says ICRA report

ICRA expects GVA growth at 8.6 per cent, while CPI inflation to be between 5.3-55 per cent in FY22 ICRA expects GVA growth at 8.6 per cent, while CPI inflation to be between 5.3-55 per cent in FY22

Ratings agency ICRA has raised the country's FY22 real GDP (gross domestic product) forecast to 9 per cent from 8.5 per cent earlier, citing the brightening prospects for H2FY22. The ratings agency, in its latest report, said the country is benefitting from the rapid ramp-up in Covid-19 vaccine administration, healthy advance estimates of kharif output and the withdrawal of expenditure management measures related to the government's spending.

"The widening coverage of Covid-19 vaccines is likely to boost confidence, which will in-turn re-energise demand for contact-intensive services, helping to revive the portions of the economy affected most by the pandemic," the report added.

Moreover, the robust kharif harvest is also likely to sustain the consumption demand from the farm sector, it said.

The ICRA report said additionally, the expected acceleration in the central government spending after the withdrawal of the earlier cash management guidelines will recharge this key driver of aggregate demand.

"Accordingly, we have revised our projection of the real GDP growth in  FY2022 to 9 per cent from 8.5%," the report said.

ICRA expects GVA growth at 8.6 per cent, while CPI inflation to be between 5.3-55 per cent in FY22. WPI inflation is expected to remain at 10 per cent in the current fiscal year.

State Bank of India this month had also estimated the country's GDP (Gross Domestic Product) growth to be 8.5-9 per cent in the current financial year. These forecasts are, however, less than the RBI's projection of 9.5 per cent for the financial year 2021-22.

Also read: India's GDP growth expected to be 8.5-9.0% in FY22: SBI Ecowrap