India's GDP to grow 9.2% in FY22

India's economy is likely to return to the growth path in the current financial year ending March 31, 2022, after a steep contraction of 7.3 per cent in the previous year due to the deadly Covid-19 waves that almost brought the economy to a standstill.

The first advance estimates released by the government pegged the gross domestic product (GDP) growth in fiscal 2021-22 at 9.2 per cent. This is below 9.5 per cent projection by the Reserve Bank of India (RBI) and the International Monetary Fund (IMF).

The Gross Value added, which strips out indirect taxes and subsidies, is expected to grow at 8.6 per cent as against a contraction of 6.2 per cent last year.

The nominal GDP, on the base of which the government assumes next financial year's (2022-23) growth rate and calculates taxes and deficits, grew at 17.6 per cent.

Real GDP or GDP at Constant Prices (2011-12) is estimated at Rs 147.54 lakh crore in 2021-22, as against the provisional estimate of Rs135.13 lakh crore, released on May 31, 2021.

Farm sector growth is estimated at 3.9 per cent, mining sector growth 14.3 per cent, manufacturing sector growth 12.5 per cent, and construction sector is estimated to grow at 10.7 per cent rate in the current year.

"Compared to the pre-Covid performance of FY2020, the advance estimates project a rise of 1.3 per cent and 1.9 per cent, respectively, for GDP and GVA in FY2022. Most conspicuous amongst the disaggregated data is the weak performance of private final consumption expenditure and trade, hotel, transport, communication, etc. which are pegged to trail their FY2020 levels by 2.9 per cent and a considerable 8.5 per cent, respectively, underscoring the lingering impact of Covid-19 on the Indian economy.

"The widening restrictions triggered by Omicron will thwart the nascent recovery in the contact-intensive services, notwithstanding the widening vaccine coverage. Amidst the ongoing uncertainty, we currently peg the impact of Omicron on GDP growth in Q4 FY2022 at around 40 bps, posing a mild downside to our FY2022 GDP growth forecast of 9.0 per cent," said Aditi Nayar, Chief Economist of ICRA.

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