Mumbai: India Ranking and research on Thursday said the country’s economy is likely to grow at 7.6 percent year-on-year in 2022-23.
The agency said after a two-year gap, the Indian economy would show meaningful expansion, because real GDP in 2022-23 was estimated at 9.1 percent higher than in 2019-20 (pre-covid level).
“However, the size of the Indian economy in FY23 will be 10.2 percent lower than the value of GDP FY23 trends.
Sustainable weakness in private consumption and investment demand is estimated to contribute 43.4 percent and 21 percent, for this shortage,” said the agency In a report.
It is said that the omicron impact on the fourth quarter growth turns out to be greater than its estimate, then there may be some reverse growth to 2022-23 which comes from basic effects.
Earlier this month, the National Statistics Office (NSO) in his first advance estimate said gross domestic product (GDP) was expected to grow at 9.2 percent at 2021-22.
The economy has contracted 7.3 percent in the previous financial year.
Speaking to reporters of the Main Economist ranking India and Public Finance Director Sunil Kumar Sinha said the government and the RBI are expected to support growth recovery.
He said the government would not be in a hurry to move towards fiscal consolidation, the MEA did not exist there would be a large number of fiscal deficits even in a budget of 2022-23, basically to support growth.
The agency expects a fiscal deficit to reach 5.8-6 percent of GDP in 2022-23.
Sinha said when the inflation trajectory was on the higher side and the economic recovery was still fragile, the RBI would refuse to raise the policy level in the near future.
The agency expects a transaction deficit to FY23 to widen to 2.3 percent of GDP.
Highlighting the ongoing risk of recovery, he said NSO’s estimation for FY22 showed that private final consumption spending (PFCE), only grew 6.9 percent yoy in FY22, although the basic data and sales were low from a lot of consumer endurance which showed strong growth .
“This shows that consumption demand is still weak and not widely based.
In fact, the slowdown in PFCE has begun even before the Covid-19 pandemic has hit the Indian economy,” the report said.
The RBI consumer confidence survey shows that consumer sentiment, which has collapsed in May 2019 and so on, has not recovered to the pre-covid level.
Growth of wages both in rural and urban areas face significant headwinds and has declined since mid 2020.
More importantly, real wages (inflation adjustments) show household purchasing power erosion, the word agency said.
Another factor that has disruption of consumption demand has recently been a sudden increase in household health expenses.
This trend may be cyclic, but the image even at the structural level is not healthy for households, he said.
“Household savings have declined and their leverage has increased significantly since FY12, shows that most consumption demand in the past has been financed through reduction of savings and higher debt or both,” said report.
This agency estimates investment, which is measured by the establishment of a gross fixed capital (GFCF), to grow 8.7 percent year-to-year at FY23.
It is expected that the export of merchandise grew 18.3 percent year-on-year at FY23 because of the prospect of profitable global trade.