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India set for 9% growth in next two financial years

India set for 9% growth in next two financial years


Despite the ongoing pandemic and uncertainty surrounding the global supply chain the Indian economy is expected to see GDP growth of 9% in both the financial years ending in 2022 and 2023 (FY22 and FY23).

According to an ICRA report, data for the third quarter of the current fiscal year did not offer strong evidence that the Reserve Bank Monetary Policy Committee’s criteria of durable and sustainable growth recovery had been met.

Aditi Nayar, chief economist at ICRA, said the data for October-November 2021 does not point to a broad recovery of growth in India. She said: “The pace of actual government spending is likely to determine whether the pace of GDP growth meaningfully exceeds 6%–6.5% in Q3 FY22.”

She said volumes for seven of the 13 key indicators of economic growth rose above pre-Covid levels in October-November 2021. However, volumes for the remaining six contracted in the period relative to October-November 2019, suggesting that the recovery was yet to be broad-based.

Nayar said restrictions introduced by several Indian states to curb the spread of Covid-19 may temporarily interrupt economic recovery, especially in the contact-intensive sectors in the fourth quarter ending 31 March 2022.

She added: “The expansion in FY23 is expected to be more meaningful and tangible than the base effect-led rise in FY22. Based on our assumptions of GDP growth… the net loss to the Indian economy from the pandemic during FY2021-23 is estimated at ₹39.3 trillion (£390bn), in real terms.”


India set to become world’s sixth biggest economy

Meanwhile, British consultancy Cebr is predicting that India is set to overtake France this year and then Britain in 2023 to regain its place as the world’s sixth biggest economy.

The firm also said the world’s economic output will exceed $100 trillion for the first time in 2022 and it will take China a little longer than previously thought to overtake the United States as the number-one economy.

Cebr also predicted that China will become the world’s top economy in dollar terms in 2030, two years later than forecast in last year’s World Economic League Table report.

“The important issue for the 2020s is how the world economies cope with inflation, which has now reached 6.8% in the US,” said Cebr deputy chairman Douglas McWilliams. He warned that if it is not controlled “then the world will need to brace itself for a recession in 2023 or 2024”.

The Cebr report showed Germany was on track to overtake Japan in terms of economic output in 2033. Russia could become a top 10 economy by 2036 and Indonesia looks on track for ninth place by 2034.