NEW DELHI: Industry body FICCI on Thursday marginally revised upward its FY22 growth forecast for the Indian economy to 9.1% from 9% estimated earlier.
“Economic recovery, post the second wave of the pandemic, seems to be holding ground and the same is also reflected in the incoming data on various high frequency indicators. The forthcoming festive season should support this momentum,” FICCI said in its latest economic outlook survey.
However, it cautioned that Diwali being a major festival and with some sense of complacency setting in with regard to the covid situation, the likely surge in people’s movement can again lead to a rise in number of new covid cases.
The median growth forecast for agriculture and allied activities has been estimated at 3.2% for FY22. A pick-up in monsoon rains in the latter part of the season and subsequent increase in kharif acreage is likely to keep growth expectations of the agriculture sector upbeat. Industry and services sector are projected to grow 12.9% and 8.6%, respectively, during the year.
FICCI’s Economic Outlook Survey was conducted in September and drew responses from leading economists representing industry, banking and financial services sector. Participating economists were also asked to share their opinion on upcoming monetary policy review and the future path of monetary policy.
There was unanimity that the Reserve Bank of India will maintain status quo on the repo rate and will continue with an accommodative stance in the forthcoming monetary policy.
“Growth remains a clear priority for the central bank and the same has been clearly communicated in the past rounds of monetary policy announcements. The latest GDP numbers for Q1 of 2021-22 did report a robust y-o-y growth which was backed by a low base. However, on a sequential basis a contraction was reported in the GDP growth in the first quarter. Also, inflation – which is being seen as a major concern -has reported some easing over the last two months. Thus, an accommodative stance is widely expected to be maintained over the near term,” FICCI said.
FICCI said the second quarter GDP data and the upcoming festive season should give a clearer idea of where we are headed on the recovery path and how the demand situation is panning out. “Moreover, we will also get greater clarity on the covid situation, and the possibility of a third wave post the festive season. Until then, the Central Bank could continue to resort to milder liquidity draining policies. Some participating economists also pointed towards RBI considering narrowing of the policy rate corridor by raising the reverse repo rate at the upcoming monetary policy review,” it added.
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