Meaningful recovery not in sight until fiscal 2023: Ind-Ra

NEW DELHI: Although economic recovery in coming financial year beginning April 1 (FY22) on a year-onyear basis will be V-shaped, the size of GDP will barely surpass the level attained in 2019-20 (FY20) and be 10.6% lower than trend value, according to India Ratings and Research (Ind-Ra).

The impact of Covid-19 pandemic and lockdown on the economy (although subsiding now) will continue to delay normalisation of economic activities in contactintensive sectors till the mass vaccination and herd immunity becomes a reality, it said.

Ind-Ra estimates the GDP growth will bounce back to 10.4% year-on-year in FY22, primarily driven by the base effect. After recording negative growth during 9M FY21, GDP growth will finally turn positive at 0.3% in 4Q FY21.

In the FY22 Union Budget, the government while setting aside fiscal conservatism decided to provide much-needed support to demand side of economy which had been missing in the Atmanirbhar package announced earlier.

As a result, Ind-Ra expects the government final consumption expenditure to grow 10.1% in FY22.

Although the private final consumption expenditure was witnessing a slowdown even before the imposition of Covid-19 induced lockdown, it is expected to grow by 11.2% in FY22 led by essentials (pharma, healthcare and telecom) followed by non-discretionary consumer goods, infrastructure (chemicals, oil and gas, IT, sugar and agri-commodities), industrial goods and cyclical sectors (power, iron and steel, logistics, cement, construction, automobiles and automobile ancillaries).