India’s real GDP growth pegged at 9% in FY22, FY23: ICRA

Ratings agency ICRA has maintained its forecast of a 9.0% GDP expansion in FY2022, with a clear K-shaped divergence amongst the formal and informal sectors of the economy. The ratings agency also expect the economy to maintain a similar 9.0% growth in FY2023.

ICRA has said the expansion in FY2023 is expected to be more “meaningful and tangible” than the base effect-led rise in FY22. 

It said the wholesale inflation will, however, see a correction in FY23. “With the pass through of the elevated wholesale inflation to the CPI inflation posing a risk, we expect the latter to correct only modestly to an average of 4.5-5.0% in FY2023 from 5.5% in FY2022.”

ICRA has said while announcement of booster doses, vaccines for 15-18 age group is welcome, restrictions to curb the spread of Covid-19 may temporarily interrupt the economic recovery. It also believes that current account deficit set to widen sharply in Q3 FY22.

On the rising Omicron threat, ICRA said while it is “cautiously optimistic” that the economic recovery in India will gain “durability” in the coming year, it is “watchful of the evolving impact of the Omicron variant”.

“In our view, rising consumption will push capacity utilisation above the crucial threshold of 75% by the end of 2022, which should then trigger a broad-based pickup in private sector investment activity in 2023,” the ICRA said.

As per the ratings agency's assumptions of the GDP growth, if the Covid-19 pandemic had not emerged vs the actual shrinkage that occurred in FY2021 and the expected recovery in the next two years, the net loss to the Indian economy from the pandemic during FY2021-23 is estimated at ₹39.3 lakh crore, in real terms.

The GDP for the second quarter of the financial year grew by 8.4% from a year ago, one of the fastest rates among major economies. Indian economy had expanded at a record rate of 20.1% in the first quarter, mainly on account of the low base of last year.