Moody’s Investors Service picked up on February 24 India’s growth forecast Up 9.5% for calendar year 2022 and 8.4% for the coming fiscal year beginning April 1, even though it marked higher oil prices and supply distortions as a drag on growth.
“We have raised our 2022 calendar year growth forecast for India from 7% to 9.5%, and maintained our forecast for 5.5% growth in 2023. This is 8.4% and 6.5% in the financial years 2022-23 and 2023-24 respectively. Moody’s said in a statement.
Moody’s predicted in November last year Economy of India To expand by 7.9% in the 2022-23 fiscal year beginning April 1. According to official estimates, the Indian economy is projected to grow at 9.2% in the current financial year ending March 31.
The pace of recovery from the first lockdown-led contraction during the delta wave in the June quarter of 2020 and later in the June quarter of 2021 was stronger than expected.
“… it is estimated that the economy has surpassed the pre-COVID level of GDP by more than 5% in the last quarter of 2021. Sales tax collection, retail activity and PMI suggest solid momentum. However, higher oil prices and supply distortions remain a drag on growth,” it said.
Moody’s said that as in many other countries, recovery in contact-intensive service areas is lagging, but should accelerate as the omicron wave subsides.
With the COVID situation improving, including the reopening of schools and colleges for individual instruction in various states, with most of the remaining restrictions now lifted, the country is moving towards normalcy.
“Our 9.5% growth forecast for 2022 assumes a relatively moderate sequential growth rate; Thus, the growth rate is likely to increase. We estimate that the carry-over from the strong end to 2021 will add 6-7% to this year’s annual growth,” it said.
The Union Budget for 2022 has prioritized growth of 2.9% of GDP along with a 36% increase in the allocation of capital expenditure for the financial year 2022-23, which the government expects to crowd out private investment. With the RBI leaving interest rates unchanged in its February meeting, monetary policy remains supportive.
“We expect the RBI to begin tightening liquidity measures and raise the repo rate in the second half of this year, provided the momentum of growth continues to improve,” Moody’s said.
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