Be a PRO & get up to 50% off on select brands. Explore Now

India's GDP expected to grow by 11% in FY22: Crisil

Crisil expects GDP growth to average 6.3 per cent between fiscals 2022-23 and 2024-25, which would be lower than the 6.7 per cent average growth seen in the decade preceding the pandemic.

March 09, 2021 / 04:46 PM IST
Representative Image

Representative Image

India's gross domestic product (GDP) is expected to grow by 11 percent in 2021-22 (FY22), ratings agency Crisil said on March 9. This is in-line with the government’s own projection for the coming fiscal, as spelt out in the Economic Survey 2020-21.

“Crisil expects India’s GDP growth to rebound to 11 percent in FY22, after an estimated 8 percent contraction in FY21, as four drivers – people learning to live with the new normal, flattening of the COVID-19 affliction curve, rollout of vaccinations, and investment-focused government spending – converge,” the agency said.

Addressing the media in a webinar, Crisil's Chief Economist DK Joshi said while the COVID-19 pandemic's stubborn hold remains a potential risk, growth is expected to be more broad-based in the second half of FY22.

“The first half is likely to be characterised by base-effect-driven recovery, amid challenges of a resurgence in COVID-19 cases. The second half may be marked by a more broad-based pick-up in activity amid vaccination roll-out and rising herd immunity domestically and supported by stronger anticipated global growth,” Joshi said.

He said the economy is likely to touch the pre-pandemic level only by the second quarter of FY22. “By the end of fiscal 2022, GDP will only be ~2 percent higher than fiscal 2020 level and ~10 percent below its pre-pandemic trend level,” he said.

Close

COVID-19 Vaccine

Frequently Asked Questions

View more
How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

View more
Show

Joshi said Crisil expects GDP growth to average 6.3 percent between fiscals FY23 and FY25, which would be lower than the 6.7 percent average growth seen in the decade preceding the pandemic.

“Despite the growth, the Indian economy will suffer a permanent loss of 11 percent of GDP. Importantly, the dynamics of domestic demand and trade continue to be unfavourable for small businesses. Policy support, therefore, must continue for them and for the urban poor, who have borne the brunt of the pandemic,” he said.

Joshi said in spite of higher global crude prices and petrol and diesel prices at home, headline retail inflation does not run a risk of inching up in the coming fiscal, primarily due to food prices remaining moderate.

He, however, cautioned that many risks remained. “Most major economies have taken on debt to fund their COVID-19 fiscal stimulus packages. This has added to existing high debt levels and will need to be reduced soon, entailing normalisation of fiscal stimulus. Any premature withdrawal of monetary or fiscal stimulus could threaten to slow the pace of economic recovery.”

Joshi said worsening stress in the financial sector and rise in non-performing assets, especially from smaller enterprises is impairing the financial system’s ability to support a sustained, rapid pick-up in growth and added that an unfavourable monsoon is the last thing India needs in the coming year.

The biggest headwind came from the now nascent second wave of the pandemic, he said. “A second wave in several economies and the recent resurgence in a few states in India suggest that the pandemic remains an ongoing risk,” Joshi said.
Arup Roychoudhury
first published: Mar 9, 2021 02:42 pm

stay updated

Get Daily News on your Browser
Sections