ICRA revises down India's GDP growth forecast to 10.5% in FY22

Rating agency ICRA on April 28 revised down its forecast for India's GDP to grow by 10 to 10.5 percent in 2021-22 from the earlier projection of 10-11 percent, in the wake of the localised restrictions imposed by various state governments owing to the COVID-19 second wave.

"With sentiments souring, there may be some loss of demand particularly in the contact intensive sectors. Overall we have tempered our expectations of GDP expansion in Q1 of FY2022 to 20-25 percent from our earlier forecast of 27.5 percent," Aditi Nayar, Chief Economist, ICRA said.

The key downside risks to our forecast are a continuation of this wave of infections and an extension of the restrictions imposed so far, relatively severe restrictions being imposed in additional states, and the existing vaccines not being effective enough against the new variants of the virus, Nayar added.

ICRA cautioned that the localised restrictions have started to impede the sequential momentum in certain sectors, such as domestic airlines’ passenger traffic, electricity demand, vehicle registrations and the generation of GST e-way bills.