India Ratings and Research on Wednesday said it estimates the gross domestic product (GDP) growth to bounce back to 10.4% year on year (YoY) in FY22, driven by the base effect.
"Although the recovery in FY22 on a YoY basis will be V-shaped, the size of the GDP will barely surpass the level attained in FY20 and will be 10.6% lower than the trend value. The impact of COVID-19 pandemic and lockdown on the economy, although subsiding, will continue to delay the normalization of economic activities in the contact-intensive sectors till the mass vaccination/herd immunity becomes a reality," the agency said.
In the FY22 union budget, the government has set aside its fiscal conservatism decided to provide the much-needed support to the demand side of the economy, which had been missing in the Atmanirbhar package announced earlier, it noted.
India Ratings, therefore, expects the government final consumption expenditure to grow 10.1% YoY in FY22.