Moody’s ups India growth estimates to 9.5% in CY2022 on stronger recovery

In its update on Global Macro Outlook 2022-23 today, Moody’s said sales tax collection, retail activity and Purchasing Managers Index suggest solid momentum


Moody’s | Indian Economy | India GDP

Abhijit Lele  | 

Rating agency Moody’s on Thursday revised India’s economic growth estimates in CY2022 upwards to 9.5 per cent from 7 per cent on stronger than expected recovery after lockdown in 2020 and Covid-19’s Delta wave in 2021. It maintained a forecast for 5.5 per cent growth in CY2023.

In its update on Global Macro Outlook 2022-23 today, Moody’s said sales tax collection, retail activity and Purchasing Managers Index suggest solid momentum. However, high oil prices and supply distortions remain a drag on growth for India.

The speed of the recovery from the first lockdown-led contraction in Q2CY2020, and subsequently in Q2CY2021 during the Delta wave, was stronger than expected. The economy is estimated to have surpassed the pre-Covid level of GDP by more than 5 per cent in the last quarter of CY2021.

As is the case in many other countries, the recovery is lagging in contact-intensive services sectors, but it should pick up as the Omicron wave subsides. With most remaining restrictions now being lifted with the improvement in the Covid situation, including the reopening of schools and colleges for in-person instruction across various states, the country (India) is on its way to normalcy.

Moody’s said the global economy is transitioning toward more stable growth, bolstered by improvement in the Covid-19 health situation.

“The current economic cycle is remarkable in the swiftness with which activity has been restored in most major economies. But declining fiscal support, tighter monetary policy and waning pent-up demand will weigh on growth momentum in most countries,” it said.

“Our 9.5 per cent growth forecast for 2022 assumes relatively restrained sequential growth rates; thus, there is upside potential to the growth rate. The carry-over from a strong finish to 2021 will add six to seven per cent to this year’s annual growth,” it further said.

Budget 2022 prioritises growth, with a 36 per cent increase in allocation to capital expenditure to 2.9 per cent of gross domestic product for FY23. This, the government hopes, will crowd in private investment. With the RBI leaving interest rates unchanged at its February meeting, monetary policy remains supportive.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor