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

"The economy is estimated to have surpassed the pre-COVID level of GDP by more than 5 per cent in the last quarter of 2021. Sales tax collection, retail activity and PMIs [purchasing managers’ indices] suggest solid momentum," Moody's said in a statement.

As per official estimates, the Indian economy is estimated to grow at 9.2 per cent in this 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.

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.

"Our 9.5 per cent growth forecast for 2022 assumes relatively restrained sequential growth rates; thus, there is upside potential to the growth rate. We estimate the carry-over from a strong finish to 2021 will add 6-7 per cent to this year's annual growth," it said.

"We expect the RBI [Reserve Bank of India] to begin tightening liquidity measures and to raise the repo rate in the second half of this year, provided that growth momentum continues to improve," Moody's added.

ALCHEMPro News Desk (DS)