India on course for 9% GDP growth in FY22

| | New Delhi
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India on course for 9% GDP growth in FY22

Thursday, 02 September 2021 | IANS | New Delhi

India on course for 9% GDP growth in FY22

The high GDP growth despite low base of last year has given confidence that the Indian economy may well grow over 9 per cent in FY22 with tailwinds coming from rapid recovery of manufacturing and construction sectors.

The data released by the Union Ministry of Statistics on Tuesday showed that the country's GDP has recovered swiftly to clock a growth of 20.1 per cent in the April-June quarter of FY22 as against a contraction of 24.4 per cent seen in the same period of previous year.

There has been a 49.6 per cent growth in Manufacturing and 68.3 per cent growth in construction. However, much of the growth is due to the low base in Q1 FY21.

Though the Q1 growth is a tad lower than RBI's expectation of 21.4 per cent growth, it is still on course to make a good recovery taking the economy back to its pre-Covid size.

According to a Bank of Baroda economic research, GDP is expected to grow at 9.7 per cent in FY22. The improving pace of vaccinations, government tax collections, exports and corporate investments in select sectors are a tailwind for growth, it has said.

Taking a similar line, a report by Kotak Institutional Equities expects GDP growth of 9 per cent in FY22 against RBI's own projections of 9.5 per cent growth. But the brokerage has cautioned that growth momentum may get disrupted if a third wave of the pandemic comes before a larger population gets fully vaccinated. Furthermore, one of the key drivers of growth in CYTD21 has been robust external demand, which risks slowing given the increasing Covid cases globally.

Additionally, surging freight costs and container shortages amid logistic bottlenecks pose downside risks to growth. So may be the pressure of lower agricultural yield this year in the wake of projections of lower than normal monsoon.

Morgan Stanley research has maintained its estimate of GDP growth at 10.5 per cent for F2022.

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