Amongst several leading activity indicators now either close to above pre COVID levels, the countercyclical stance of the Budget 2021 has further cemented expectations of growth recovery continuing well into the next fiscal year. As such, over the last few weeks, various agencies, domestic and global, have amply quantified the FY22 growth rebound. According to Acuité Ratings & Research, the GDP in next fiscal year is expected to show a record expansion of 11 per cent.
Economic Survey pegged real GDP growth for FY22 at 11.0%, followed by the RBI’s estimate of 10.5% in the Feb-21 Monetary policy meeting. As per IMF, India is expected to be the fastest growing economy in the world, slated to expand by 11.5%. In similar vein, global rating agencies Fitch and S&P have pinned FY22 GDP growth at 11% and 10% respectively.
In nominal terms, Union Government based its budget calculations on a GDP growth of 14.4% and the other key ratings agency of Moody’s expects India to grow by 17%. While the range of real GDP growth prognosis varies between 10-15% broadly, a double-digit expansion looks almost a certainty in FY22.
Growth prospects remain positive amidst gradual easing of lockdown restrictions, supportive fiscal and monetary policy environment, global recovery, and pent-up demand. Further traction in roll-out of COVID vaccine will boost sentiment. Pace of commodity price increase, however, needs to be watched.