New Delhi: The Indian economy is expected to grow by 9.1% in the 2021-22 financial year (FY22). The Gross Domestic Product (GDP) forecast represents a slight improvement over the 9% growth forecast recorded in its previous survey in July.
“Economic recovery seems to be holding the ground after the second wave of the Govt-19 epidemic and this is reflected in the incoming data of various high frequency indicators. The upcoming festive season should support this momentum,” the Federation of Indian Chambers of Commerce and Industry said.
However, it added a cautionary note to the Diwali celebrations, urging “to bring some sense of satisfaction in relation to the Govt situation” because “the rise of the people’s movement will again lead to an increase in new corona virus cases.”
According to the FICCI survey, the average growth forecast for agriculture and related activities is 3.2% for FY22. The industrial and services sectors are forecast to grow by 12.9% and 8.6% respectively.
The survey was conducted in September and received responses from economists from the industry, banking and financial services sectors.
When asked about the upcoming monetary policy review of the Reserve Bank of India (RBI), a majority of economists commented that the central bank will maintain the repo rate and maintain a consistent position. They often felt that the February 2022 policy meeting could indicate a change in the RBI’s neutral position from the shelter and a rise in the repo rate in the next financial year.
The current repo rate – the rate at which the Reserve Bank lends to commercial banks – stands at 4%.
“Second quarter GDP data and the upcoming festive season should give us a clearer idea of where we are heading on the recovery path and how the demand situation is coming out. Also, we will get more clarity on the Govt situation and possibilities. The third wave after the festive season
India’s economy grew by 20.1% in the first quarter (Q1), ended June 30 (FY22) and contracted by 24.4% in Q1 FY21. Also, second quarter (Q2 FY22) GDP data is expected to be released on November 30th.
The average forecast for the survey based on the CPI (retail) inflation rate was 5.6% for 2021-22.