The Indian economy (GDP or gross domestic product) is expected to grow 9.2% in 2021-22, the first advance estimates released by the government says. The projection is lower than the 9.5% GDP growth estimated by the Reserve Bank of India's (RBI) monetary policy committee last month, but signals a reversal from 7.3% contraction registered during the Covid-19 pandemic hit previous year (2020-21).
"Real GDP or GDP at constant prices (2011-12) in the year 2021-22 is estimated at ₹147.54 lakh crore, as against the provisional estimate of GDP for the year 2020-21 of ₹135.13 lakh crore, released on 31st May 2021. The growth in real GDP during 2021-22 is estimated at 9.2% as compared to the contraction of 7.3% in 2020-21. Real GVA at basic prices is estimated at ₹135.22 lakh crore in 2021-22, as against ₹124.53 lakh crore in 2020-21, showing a growth of 8.6%," a press note issued by the Ministry of Statistics and Programme Implementation said.
Meanwhile, credit rating firm ICRA Ltd pointed out that when compared to the pre-Covid performance of FY2020, the advance estimates project an anemic rise of 1.3% and 1.9%, respectively, for GDP and GVA in FY2022. “Most conspicuous amongst the disaggregated data is the weak performance of private final consumption expenditure and trade, hotel, transport, communication etc., which are pegged to trail their FY2020 levels by 2.9% and a considerable 8.5%, respectively, underscoring the lingering impact of Covid-19 on the Indian economy," Aditi Nayar, chief economist at ICRA, said.
According to ICRA, the implicit GDP growth of 5.6% for H2 FY2022 built in the official estimate may not fully factor in the admittedly evolving impact of Omicron. “Our sense is that after a 6.0-6.5% rise in Q3 FY2022, the GDP expansion is set to slip below 5.0% in the ongoing quarter. The YoY contraction in construction GVA for H2 FY2022, reflects the high base as well as the disruption seen in Q3 FY2022 in southern India on account of heavy rainfall. In contrast, the double-digit growth projected in mining and quarrying in H2 FY2022 is significantly higher than our own estimate of a low single digit rise. The YoY growth in the components of GDP in H2 FY2022 varies sharply from a muted 1.8% for private final consumption expenditure to a moderate 6.1% for gross fixed capital formation, to a rather high 13.9% for government final consumption expenditure. While we do expect the Government of India's spending to be back-ended in H2 FY2022, this is similar to the situation in H2 FY2021, based on which we anticipate a lower growth of GFCE in the latter half of the current fiscal," Nayar said.