Comments
International Monetary Fund (IMF) on Tuesday lowered India’s GDP (Gross Domestic Product) growth rate by 50 basis points to 9 per cent in Fiscal Year 2021-22 (FY22). In October, it has maintained the estimated rate of 9.5 per cent during the current fiscal.
100 basis points mean one percentage point
In its January update of ‘World Economic Outlook (WEO)’, fund remarked that impact of new variant of Covid-19, Omicron has been captured in GDP growth estimate for FY22. This means new variant could shelve GDP growth by 50 basis points in current fiscal. Though, India has not gone for nation wide lockdown like 2020 or stringent localised lockdown of 2021, still there have been localised restrictions including contact-based services and that has impacted the growth estimate.
Earlier, another global agency Fitch 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. Its earlier projection was 8.7 per cent. At the same time, government’s statistic office projected growth rate of 9.2 per, much lower than its initial estimate of 11 per cent.
Also, domestic agency India Ratings & Research (Ind-Ra) reduced the growth projection by 10 basis points to 9.3 per cent from 9.4 per cent. Reserve Bank of India still maintains 9.5 per cent growth. It is expected to revise the estimate in February when Monetary Policy Committee (MPC) will meet after the budget.
Meanwhile, IMF has upped the growth projection for Fiscal Year 2022-23 (FY 23) and Fiscal Year 2023-24 by 60 basis points to 9 per cent and 7.1 per cent respectively. For global economy it said that, it said global growth is expected to moderate from 5.9 in 2021 to 4.4 percent in 2022—half a percentage point lower for 2022 than in the October WEO, largely reflecting forecast markdowns in the two largest economies – US and China. For 2023, it has revised the forecast by 20 basis points to 3.8 per cent.
It said that the upward revision to global growth in 2023 is mostly mechanical. Eventually, the shocks dragging 2022 growth will dissipate and— as a result—global output in 2023 will grow a little faster. “Among prominent revisions not due to the pandemic, India’s prospects for 2023 are marked up on expected improvements to credit growth—and, subsequently, investment and consumption—building on better-than-anticipated performance of the financial sector,” the report said.
Talking about global economy, IMF said that as the new Omicron Covid-19 variant spreads, countries have reimposed mobility restrictions. Rising energy prices and supply disruptions have resulted in higher and more broad-based inflation than anticipated, notably in the United States and many emerging market and developing economies. The ongoing retrenchment of China’s real estate sector and slower-than-expected recovery of private consumption also have limited growth prospects.
The revision in growth estimate has been made public at a time, when Government is getting ready to present Union Budget for FY 23 and Economic Survey for FY 22. The survey is expected to give revise growth estimate for current fiscal and first estimate for fiscal. Survey will be tabled in the Parliament on January 31 while budget will be on February 1.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.