This time after weaker-than-expected GDP data for October-December 2021, economists have started lowering their forecast for India’s growth in FY22. Data released by the Ministry of Statistics and Program Implementation on February 28 shows that India’s GDP grew by only 5.4 per cent in the last quarter of 2021, according to the Moneycontrol Survey. The figure is much lower than the expectation of 6.2 percent.
The growth rate for October-December 2021 at 5.4 per cent was 120 basis points lower than the Reserve Bank of India’s (RBI) forecast of 6.6 per cent in December 2021. RBI did not specify the updated forecast for the quarter in the latest resolution of the Monetary Policy Committee released on February 10.
Gaura Sen Gupta, IDFC First Bank’s India economist, said, “We revise our GDP growth forecast for the full year of FY 2022 to 8.9 percent. Due to the Omicron wave, activity in Q4 is expected to decline. Some reduction in levels is expected, but it is expected to be much weaker than previous waves.”
Let us tell you that Gaura Sen Gupta had earlier expected the Indian economy to grow by 9.2 percent in FY22.
GST collection stood at 1.33 lakh crore in February, 5.6% less than the month of January
Others making similar downward corrections include Acuite Ratings, which lowered its forecast by 30 basis points to 9.2 percent. The biggest drop in estimates came from Barclays, which has cut its forecast for this year by 120 basis points to 8.8 percent.
According to Rahul Bajoria, Barclays’ chief India economist, the recovery is “showing signs of fatigue, which is going down due to the lack of supply.” “Omicron’s impact was mild in January, yet could further curtail recovery in the first quarter of 2022,” Bajoria said in a note on February 28.
The second advance estimate shows that India’s GDP growth will slow down to 4.8 per cent in January-March 2022, data for which will be released on May 31. However, economists also see downside in this reduced growth figure.
State Bank of India’s group chief economic adviser Soumya Kanti Ghosh said, “Given the impact (though not so severe) of the Omicron variant and the Russia-Ukraine crisis in Q4 We believe that Q4 GDP growth cannot exceed 4.5 per cent.”
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