Moody's forecasts 9.5% GDP growth for India in 2022
The GDP growth forecast for 2023 has been retained at 5.5%
Moody's Investors Service has predicted a stronger-than-expected economic recovery in India after the lockdown of 2020. This comes after the GDP growth forecast for India was raised to 9.5% for the current calendar year from the 7% seen earlier.
Meanwhile, the GDP growth forecast for 2023 has been retained at 5.5%, reports The Economic Times.
According to Moody's, the prediction applies that there will be an 8.4% growth in fiscal years 2022-2023 and a 6.5% growth in 2023-2024.
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"... the economy is estimated to have surpassed the pre-Covid level of GDP by more than 5% in the last quarter of 2021. Sales tax collection, retail activity and PMIs suggest solid momentum. However, high oil prices and supply distortions remain a drag on growth," it said.
With India easing out of the Covid-19 restrictions, the country is slowly returning to normalcy by opening schools and colleges.
"Our 9.5% growth forecast for 2022 assumes relatively restrained sequential growth rates; thus, there is upside potential to the growth rate. We estimate the carry-over from a strong finish to 2021 will add 6-7% to this year's annual growth," it said.
The 2022 budget priorities growth, with a 36% increase in allocation to capital expenditure to 2.9% of GDP for the fiscal year 2022-23, which the government hopes will crowd in private investment. With the RBI leaving interest rates unchanged at its February meeting, monetary policy remains supportive.
"We expect the RBI to begin tightening liquidity measures and to raise the repo rate in the second half of this year, provided that growth momentum continues to improve," Moody's added.
