New Delhi: The shift to a centralized covid vaccination campaign could boost India’s economic growth prospects, rating agency Icra Ltd. said on Thursday. The agency forecasts gross domestic product (GDP) growth of 8.5 percent for fiscal 22, which could be further bolstered by a strong vaccination campaign.
“If vaccination coverage is accelerated following the refocused purchasing policy, the expansion of GDP during fiscal year 2022 could reach 9.5%, with an increasing increase” in the third and fourth quarters of fiscal year 22 , said the rating agency.
Icra made the baseline growth forecast of 8.5% by examining the impact of the second wave of Covid-19 and regional lockdowns across a variety of high-frequency indicators in April-May 2021.
“Now that the new cases have moderated and the restrictions are relaxed, we have set our baseline GDP growth forecast for fiscal 2022 at 8.5%,” Chief Economist Aditi Nayar said in a statement. analysis.
Icra continues to expect a prolonged negative impact of Wave 2 on consumer sentiment and demand, with health and fuel spending eating away at disposable income and less pent-up demand in FY22 compared to at FY21.
Despite the expectation of a normal monsoon dampening the outlook for agricultural production and less reverse migration in 2021 compared to the previous year, the rating agency expects the sharp increase in rural infections and the loss of jobs and remittances weaken rural sentiment and demand.
Demand for contact-intensive services will gradually pick up as vaccinations become more widespread, Icra said.
If vaccination coverage accelerates, growth in the third quarter could reach 6.9% and the fourth to 9.5%, the rating agency said.
After pent-up demand satiety observed during the holiday season in 2020, purchases of durable consumer goods could be curtailed, which would impact capacity utilization in FY22. However, an increase in exports in line with the expected vaccine-induced rebound in some large economies could boost capacity utilization in export-oriented sectors, the agency said.
“Even though the second wave of Covid-19 infections in India has weakened the short-term outlook for the Indian economy, vaccine optimism has spiked global commodity prices. ICRA continues to rise. expect weak domestic demand to limit pricing power, squeezing margins in many sectors.With CPI and WPI inflation expected to average 5.2% and 9, 2% respectively, ICRA expects nominal GDP to increase by 15-16% in fiscal year 2022, ”the agency said.
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