Moody's ups India's growth forecast to 9.5% for 2022

Moody’s Investors Service on February 24 raised India’s growth forecast to 9.5% for the calendar year 2022 and to 8.4% for the coming fiscal beginning April 1, even as it flagged high oil prices and supply distortions as a drag on growth.

“We have raised our 2022 calendar year growth forecasts for India to 9.5% from 7%, and maintained our forecast for 5.5% growth in 2023. This translates into 8.4% and 6.5% in fiscal years 2022-23 and 2023-24, respectively,” Moody’s said in a statement.

In November last year, Moody’s had forecast India’s economy to expand 7.9% in the 2022-23 fiscal beginning April 1. As per official estimates, Indian economy is estimated to grow at 9.2% in the current fiscal ending March 31.

The speed of the recovery from the first lockdown-led contraction in the June quarter of 2020 and subsequently in the June quarter of 2021 during the Delta wave was stronger than expected.

“... the economy is estimated to have surpassed the pre-COVID level of GDP by more than 5% in the last quarter of 2021. Sales tax collection, retail activity and PMIs suggest solid momentum. However, high oil prices and supply distortions remain a drag on growth,” it said.

Moody’s said as is the case in many other countries, the recovery is lagging in contact-intensive services sectors, but it should pick up as the Omicron wave subsides.

With most remaining restrictions now being lifted with the improvement in the Covid situation, including the reopening of schools and colleges for in-person instruction across various States, the country is on its way to normalcy.