GDP FY22 estimate: India’s GDP will grow at 9.2 per cent in the financial year 2021-22 (FY22) as against a contraction of 7.3 per cent in the previous financial year, estimated government on Friday. While govt’s estimated GDP growth rate of 9.2% for FY22 is the highest in at least 17 years, it is lower than than the 9.5% growth estimated by the Reserve Bank of India (RBI) in its monetary policy committee meeting held in December 2021. The growth in nominal GDP during is estimated at 17.6%, while nominal GVA is estimated at Rs 210.37 lakh crore in FY22, as against Rs 179.15 lakh crore in FY21, showing a growth of 17.4%. The government releases advance GDP estimates numbers ahead of the Budget to calculate crucial figures such as tax collection estimates and fiscal deficit projections.
Despite the shortfall in disinvestment proceeds and additional demand for supplementary grants, the fiscal deficit target of 6.8% of GDP is likely to be achieved in FY22. The 17.6% increase in nominal GDP also results in a substantial decline in the debt to GDP ratio, which is the focus of FRBM, according to Govinda Rao, Chief Economic Adviser, Brickwork ratings.
The advance estimate of GDP for FY22 released by the govt are more optimistic at 9.2%, considering the supply bottlenecks, coal, power and semiconductor shortages and looming third wave of the pandemic. An increase in the nominal GDP at 17.6% provides additional expenditure space for the government. As per the nominal GDP estimates, the budgeted fiscal deficit for FY22 works out to be 6.5% of the GDP, said Govinda Rao, Chief Economic Adviser, Brickwork ratings.
Mainly led by strong Investment activity and followed by consumption growth, FY22 GDP advance estimate has arrived at 9.2%. This is a tad lower that earlier government estimate but still among the fastest globally. With improved pandemic awareness and technology led preparation, business and consumer confidence is high and government response on pandemic is graded and more localized now. Hence, we hope to have a softer landing from the third wave and continue economic momentum without severe disruptions – Vivek Rathi, Director ‑ Research, Knight Frank India
The estimated GDP growth rate has been aided by an extremely favourable base effect, due to GDP contracting by a record 7.3% in FY21 on account of the COVID-19 pandemic. While the govt's estimated GDP growth rate of 9.2 percent for FY22 is the highest in at least 17 years, it is lower than RBI's GDP growth forecast of 9.5 percent for FY22. The RBI's forecast said India's GDP was seen growing 6.6 percent in October-December 2021 and 6% percent in January-March 2022. According to the first advance estimate, growth in gross value added for FY22 has been pegged at 8.6 percent, and GDP in nominal terms is seen growing 17.6 percent in FY22.
Farm sector growth is estimated at 3.9%, mining sector growth 14.3%, manufacturing sector growth 12.5%, and construction sector is estimated to grow at 10.7% rate in FY22.
Nominal GVA at Basic Prices is estimated at Rs 210.37 lakh crore in FY22, as against Rs 179.15 lakh crore in 2020-21, showing a growth of 17.4 per cent. For FY21, govt had estimated GDP to contract by 7.7%. India's annual GDP had contracted for first time in 40 years in the previous financial year due to Covid-induced slump.
“Real GDP in the year 2021-22 is estimated at Rs 147.54 lakh crore, as against the Provisional Estimate of GDP of Rs 135.13 lakh crore, released in May 2021. The growth in real GDP during 2021-22 is estimated at 9.2 per cent as compared to the contraction of 7.3 per cent in 2020-21. Real GVA at Basic Prices is estimated at Rs 135.22 lakh crore in 2021-22, as against Rs 124.53 lakh crore in 2020-21,” showing a growth of 8.6 per cent” the NSO said in its release.
India’s GDP will grow at 9.2 per cent in the financial year 2021-22 (FY22) as against a contraction of 7.3 per cent in the previous financial year, estimated government on Friday. The advanced estimate growth is lower than the 9.5 per cent growth estimated by the Reserve Bank of India (RBI) in its monetary policy committee meeting held in December 2021.
The country needs to accelerate economic growth to above eight per cent to achieve its target of becoming a USD 5-trillion economy by 2025, State Bank of India former chairman Rajnish Kumar said. “If India wants to become a USD 5-trillion economy then obviously we can’t be happy with a 5-6 per cent economic growth. We need to grow above eight per cent,” Kumar said at a virtual event organised by the IMC Chamber of Commerce and Industry.
India is likely to overtake Japan as Asia's second-largest economy by 2030 when its GDP is also projected to surpass that of Germany and United Kingdom to rank as world's number three, IHS Markit said in a report. Currently, India is the sixth-largest economy in the world, behind the US, China, Japan, Germany and the UK. India's nominal GDP measured in USD terms is estimated to rise from $2.7 trillion in 2021 to $8.4 trillion by 2030,” IHS Markit Ltd said.
The Omicron variant spread will impact the January-March quarter GDP by 0.40 per cent and shave off 0.10 per cent from the FY22 growth, as many states resort to restrictions to limit infections. “Curbs in various forms such as reducing the capacity of market/market complexes and night/weekend curfews to check human mobility/contact have already started in several states, which are impacting economic activities,” India Ratings and Research said in a note. For the entire FY22, the GDP is expected to clock a growth rate of 9.3 per cent, 0.10 per cent lower than what was estimated earlier.
The country’s real gross domestic product (GDP) is likely to maintain a 9 pc growth rate in fiscal 2022 and 2023, amid concerns over the Omicron variant of COVID-19. The Indian economy grew at 8.4 per cent in the second quarter of the current fiscal, as against a growth of 20.1 per cent in the April-June quarter.
After having witnessed a sequential improvement in Q2FY22, due to pent-up demand, it appears that the growth rates in the third and fourth quarters need a downward revision. An apparent third wave, rising international crude oil prices, mineral products, steadily increasing costs of raw materials and freight rates, disruptions in semiconductor supply, and coal and power supply are likely to slow down the growth momentum, said Brickwork Ratings.
Fitch Ratings cut India’s economic growth forecast to 8.4 per cent for the current fiscal year ending March 31, 2022, saying the rebound after the second wave of COVID infections has been subdued than expected. Fitch, which had previously forecast a GDP growth of 8.7 per cent in 2021-22 (April 2021 to March 2022), however, raised the economic growth projection for the next financial year (FY23) to 10.3 per cent from previously forecast 10 per cent.
The Reserve Bank of India has maintained its GDP growth projects for this fiscal year at 9.5% but cautioned that economic recovery is not yet strong enough to be self-sustaining and durable. In an address after the Monetary Policy Committee (MPC) meet, RBI Governor Shaktikanta Das said managing a durable, strong and inclusive recovery is the central bank's mission. “The projection for real GDP growth is retained at 9.5% in 2021-22 consisting of 6.6% in Q3 and 6.0% in Q4 of 2021-22,” he said.
The progress in vaccination promised broad steady progress in an economic revival, and the economy was poised to achieve 9.5% growth projected by the RBI. However, the fast spread of the Omicron variant, heralding the third wave of the pandemic, has added to the uncertainty and insecurity and threatens to disrupt progress in the broad-based recovery.
The third wave of the pandemic, which has seen a massive spike in infections after the more infectious Omicron variant of the coronavirus appeared, is likely to shave 40 bps off the fourth quarter GDP growth that may print in at 4.5-5 per cent, warns Icra Ratings.