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The latest round of Economic Outlook Survey by the Federation of Indian Chambers of Commerce and Industry (FICCI) has put forth an annual median gross domestic product (GDP) growth forecast for 2021-22 at 9.1 per cent. This marks a marginal improvement from the growth projection of 9 per cent recorded in the previous survey round in July this year.
The present survey was conducted in September and drew responses from leading economists representing industry, banking and financial services sector.
Economic recovery following the second wave of the pandemic seems to be holding ground and the same is also reflected in the incoming data on various high frequency indicators. The forthcoming festive season should support this momentum, FICCI said in a press release.
The latest round of Economic Outlook Survey by the Federation of Indian Chambers of Commerce and Industry (FICCI) has put forth an annual median gross domestic product (GDP) growth forecast for 2021-22 at 9.1 per cent. This marks a marginal improvement from the growth projection of 9 per cent recorded in the previous survey round in July this year.
However, with Diwali being a major festival and with some sense of complacency setting in with regard to the COVID situation, the likely surge in people’s movement can again lead to a rise in number of new COVID cases. A note of caution continues to underline as far as the health and economic situation is concerned.
The median growth forecast for agriculture and allied activities has been put at 3.2 per cent for 2021-22. Pick up in monsoon rains in the latter part of the season and subsequent increase in kharif acreage is likely to keep growth expectations of the agriculture sector upbeat. Industry and services sector are projected to grow by 12.9 per cent and 8.6 per cent respectively during the year.
There was clear unanimity among the participating economists that the Reserve Bank of India will maintain status quo on the repo rate and will continue with an accommodative stance in the forthcoming monetary policy.
With regard to heading back to the process of normalization, it was largely felt that the Central Bank may indicate a change of stance from accommodative to neutral in the February 2022 policy meeting. However, a hike in the repo rate only looks imminent in the next fiscal year (April 2022).
The survey puts the median forecast for consumer price index-based inflation rate at 5.6 per cent for 2021-22, with a minimum and maximum range of 5.4 per cent and 5.8 per cent respectively. Retail prices are projected to ease slightly in Q3 2021-22.
On further steps that can be undertaken by the Central Bank to support growth, the participating economists believed that the Reserve Bank of India has done a commendable job in easing domestic economic and financial situation throughout the pandemic. It was pointed out that maintaining adequate liquidity would remain important going ahead even as the Central Bank moves towards normalization.
A majority of the economists felt that continued support remains especially critical for the micro, small and medium enterprises and the informal sector.
The high volume of foreign exchange reserves parked with the Reserve Bank of India will provide the much-needed resilience to the economy from any headwinds arising from the tapering process, the survey found.
Fibre2Fashion News Desk (DS)
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