Advance estimates released by the CSO suggest that India’s economic growth is expected to bounce back swiftly to 9.2 per cent in FY22 after contracting by 6.6 per cent in FY21. The swift bounce back indicates that the momentum of economic activity is gaining further traction, aided by expanding vaccination coverage, rapid subsiding of new infections and release of pent-up demand along with swift policy interventions by the government to tackle the pandemic induced disruptions.
From the supply side, the agriculture & allied sectors, which has been the least impacted by the pandemic is expected to grow by 3.9 per cent in FY22 after growing by 3.6 per cent in the previous year. The industrial sector is expected to rise by 12.2 per cent in FY22 after contracting by 6.4 per cent in FY21. The services sector, on the other hand is the hardest hit by the pandemic, mostly because of the contact-based nature of the sector. It is estimated to grow by 8.5 per cent in FY22, following a contraction of 8.4 per cent in FY21.
The government throughout has continued to announce reforms which have shaped the growth trajectory of the country. It has laid emphasis on supply-side reforms rather than a total reliance on demand management through measures such as deregulation of numerous sectors, simplification of processes, removal of legacy issues like ‘retrospective tax’, privatisation and production-linked incentives to boost the manufacturing capacity of India. It has also increased capital spending which can be seen both as demand and supply enhancing response as it creates infrastructure capacity for future growth.
With the reform’s momentum staying intact and the likelihood of robust government spending crowding-in private investment, India is set to achieve GDP growth of 8.0-8.5 per cent in FY23. Robust capex boost from the central government will also support growth.
However, there are certain challenges that also persist on the horizon. These challenges encompass risks such as the emergence of new variants of Covid-19, elevated energy prices leading to a further rise in inflation levels in the country, and most importantly the liquidity tapering and hiking of interest rates by US.
Advance estimates released by the CSO suggest that India’s economic growth is expected to bounce back swiftly to 9.2 per cent in FY22 after contracting by 6.6 per cent in FY21. The swift bounce back indicates that the momentum of economic activity is gaining further traction, aided by expanding vaccination coverage, rapid subsiding of new infections and release of pent-up demand along with swift policy interventions by the government to tackle the pandemic induced disruptions.
From the supply side, the agriculture & allied sectors, which has been the least impacted by the pandemic is expected to grow by 3.9 per cent in FY22 after growing by 3.6 per cent in the previous year. The industrial sector is expected to rise by 12.2 per cent in FY22 after contracting by 6.4 per cent in FY21. The services sector, on the other hand is the hardest hit by the pandemic, mostly because of the contact-based nature of the sector. It is estimated to grow by 8.5 per cent in FY22, following a ...