India’s GDP could grow 10% in fiscal 2022, said S&P Global Ratings recently.
Consistently good agriculture performance, a flattening of the Covid-19 infection curve, and a pickup in government spending are all supporting the Indian economy, according to a report by the rating agency. India’s fiscal year begins on April 1 and ends on March 31 in the following year.
Having the second highest number cases of more than 10.9 million infections, the country slipped into a technical recession last year, estimated to see a GDP contraction of 7.7% in the 2021 fiscal year that will end on Mar 31, 2021.
As the number of new infection cases declines, India’s near-term prospects are positive, said S&P.
The country kicked off the world’s largest mass vaccination campaign against the coronavirus last month, aiming to inoculate 300 million people in the first phase.
“We view Covid vaccinations as critical to India’s recovery over the next few years, and as key to normalizing demand,” the S&P report said, adding, “The emergence of yet more contagious Covid-19 variants with the potential to evade vaccine-derived immunity present a major risk to this recovery.”
In addition, S&P pointed out that the speed of economic recovery in India will have important implications for its sovereign credit rating, which includes the sustainability of the government’s strained fiscal position.
In this month’s budget announcement for 2022, India focused on spending measures in a bid to drive demand and growth.
India’s fiscal deficit target for the next fiscal year is around 6.8% of GDP — higher than levels before the pandemic.