Moody’s, rating agency has revised India’s economic growth estimates in calendar year (CY)2022 upwards to 9.5 per cent from 7 per cent. In its latest update it 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 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 noted.
“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 added. It has maintained a forecast for 5.5 per cent growth in CY2023.
Further, the government hopes that the Budget 2022 prioritises growth, with a 36 per cent increase in allocation to capital expenditure to 2.9 per cent of GDP for FY23 will crowd in private investment. With the RBI leaving interest rates unchanged at its February meeting, monetary policy remains supportive.