Moody’s Investors Service is raised India’s growth forecast to 9.5 % for the calendar year 2022 that to 8.4 % for the coming fiscal beginning April 1 and even as it flagged high oil prices and supply distortions as a drag on growth.
Stating that the economic recovery from the first, second Covid wave in 2020 and 2021. It has been stronger than expected and Moody’s explained Goods and Services Tax collection, retail activity and Purchasing Managers’ Index suggest solid momentum.
The speed of the recovery from the first lockdown led to a contraction in the June quarter of 2020. In the June quarter of 2021, the Delta wave was stronger than expected.
Moody’s had forecast India’s economy to expand 7.9% in 2022 to 23 fiscal beginning. As per official estimates and Indian economy is estimated to grow at 9.2 % in the current fiscal ending March 31.
Moody’s explained the economy is estimated to have surpassed the pre-Covid level of GDP by more than 5% in the last quarter of 2021. Sales tax collection also retail activity and pmis suggest solid momentum.
High oil prices, supply distortions remain a drag on growth. It was also explained to him.
With most remaining restrictions now being lifted with the improvement in the Covid situation including the reopening of schools and colleges for in-person instruction across various states and the country is on its way to normalcy.
The 9.5% growth forecast for 2022 assumes a relatively restrained sequential growth rate. There is upside potential to the growth rate. We estimate the carry-over from a strong finish to 2021 will add 6-7% to this year’s annual growth.
Also, he said the 2022 union budget prioritizes growth with a 36% increase in allocation to capital expenditure to 2.9 % of GDP for the fiscal year 2022to 23 that which the government hopes will crowd in private investment.
Expect the RBI to begin tightening liquidity measures, raise the repo rate in the second half of this year provided that growth momentum continues to improve.
About global economy in the current economic cycle is remarkable in the swiftness with which activity has been restored in most major economies.
But declining fiscal support, tighter monetary policy, and waning pent-up demand will weigh on growth momentum in most countries as stated by the reports.
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