ICRA said that if the vaccination campaign picks up, the economy will perform well in the third and fourth quarters.
Mumbai. Rating agency Icra (ICRA) has said that due to the decreasing cases of Kovid-19 infection and easing of restrictions, the country’s GDP growth rate can be 8.5 percent in the financial year 2021-22. According to the rating agency, the Gross Value Added will be 7.3 percent in the current financial year.
Aditi Nair, Chief Economist, ICRA, said, “The impact of the second wave of the Kovid-19 epidemic and the lockdown in various states for its prevention was seen in various high-frequency indicators during April-May 2021. Now new cases have come down and restrictions are being relaxed. In such a situation, we estimate that the GDP growth rate of the country will be 8.5 percent in the financial year 2021-22.
The economy will perform well in the third and fourth quarters
The rating agency also said that in view of the change in vaccine policy and announcement of procurement at the central level, if the vaccination campaign picks up, then the economy will perform well in the third and fourth quarters. With this, the GDP growth rate can go up to 9.5 percent in the current financial year.RBI estimates, GDP growth may be 8.5 percent in FY22
It is noteworthy that in the financial year 2020-21, the country’s GDP has declined by 7.3 percent. In the data released by the RBI last week, the growth rate during the current financial year was estimated to be 9.5 percent.
Less number of people returned to their homes compared to 2020
The rating agency also said that the suppressed demand in the financial year 2021-22 will come out less than in 2020-21. With the monsoon being normal this year, foodgrain production is expected to be better. Also, laborers have returned to their homes in less numbers in 2021 as compared to 2020. Despite all these reasons, this time due to the rapid spread of infection in rural areas, people losing jobs and relatively less money coming from outside, there is a possibility of weak sentiment and demand at the village level.
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According to ICRA, weakening domestic demand will impact pricing and may impact margins in many sectors. Regarding inflation, the rating agency has said that the CPI (Consumer Price Index) and WPI (Wholesale Price Index) inflation is expected to average 5.2 percent and 9.2 percent, respectively. The GDP growth rate at market price is likely to be 15 to 16 percent in 2021-22.