New Delhi, Jun 10 (Mayank Nigam) Credit rating agency ICRA has put India’s gross domestic product (GDP) growth projection at 8.5 per cent for current fiscal. ICRA projects the year-on-year growth of GDP and gross value added (GVA) at basic prices at 8.5 per cent and 7.3 per cent, respectively, in FY2021-22, said the agency in a press release on Thursday, adding that if vaccine coverage is accelerated the GDP expansion in FY22 may be as high as 9.5 per cent, with a widening upside in third and forth quarters.
For the first quarter ICRA has predicted GDP growth to be at 14.9 per cent, followed by 8.0 per cent in Q2, 5.6 per cent in Q3 and 7.0 per cent in Q4. “The impact of the second wave of Covid-19 and the ensuing state-wise restrictions was seen across a variety of high frequency indicators in April-May 2021. Now that the fresh cases have moderated, and restrictions are being eased, we have placed our baseline GDP growth forecast for FY22 at 8.5 per cent,” Aditi Nayar, Chief Economist, ICRA Ltd said.
ICRA expects the GDP growth to exceed the GVA growth by 120 bps during the fiscal, based on the expectations related to the value of taxes on products and subsidies on products in FY22. The likely higher outgo towards food subsidies by the central government and the impact of the release of food subsidy arrears in FY2020-21 has been taken into account, the agency added. ICRA has cautioned that despite the expectation of a normal monsoon buffering the prospects for crop output and less reverse migration in 2021 compared to 2020, the combination of the sharp rise in rural infections, loss of employment as well as remittances may weaken the rural sentiment and demand. “ICRA continues to expect a prolonged negative impact of the second wave on consumer sentiment and demand, with healthcare and fuel expenses eating into disposable income, and less pent-up/replacement demand in FY22 relative to FY21,” it said.