India is set to regain its position as the world’s fastest-growing major economy this year, but any euphoria is likely to be tempered by concerns over a resurgent coronavirus outbreak.
Gross domestic product will grow 9.2 per cent in the fiscal year ending March 2022, the first official estimate released by the Statistics Ministry on Friday shows. That is slightly slower than the 9.5 per cent expansion forecast by the Reserve Bank of India as well as economists surveyed by Bloomberg.
With one quarter still left in the fiscal year and parts of the economy already facing fresh curbs to stem the Omicron variant, the estimate is likely to undergo revisions.
The uncertainty spawned by the pandemic has so far kept fiscal and monetary policies accommodative to aid a durable recovery, even as global peers have begun dialling back stimulus measures to combat inflation.
A sustained pace of growth is key to attracting investors to India, which is in the middle of a massive privatisation drive, besides boosting manufacturing and creating jobs.
“We do have pockets of revenge demand coming in spurts but consumption still needs some hand-holding,” said Shubhada Rao, founder of QuantEco Research in Mumbai, who reckons that the impact of India’s third virus wave may have been factored in these estimates.
“We are looking at 7.5 per cent growth next year.”