BENGALURU, Oct 5 (Businesshala) – India’s economic recovery from pandemic-related shutdowns threatens to delay further six months of this fiscal year, according to economists in a Businesshala poll that are expected to catch or accelerate high inflation. , Do not fall.
Price pressure in the world’s second most populous country has increased due to rising fuel prices, but the Reserve Bank of India does not expect an interest rate hike in April-June 2022 until at least the beginning of the next financial year.
With concerns about risks to growth, this leaves the RBI slightly behind many of its emerging market peers who are already raising rates.
Kunal Kundu said, “While extremely liberal monetary policy has prevented the economy from falling off a cliff, the continuation of this policy in the absence of proper financial support will hardly move the needle in terms of the pace of recovery of lost growth potential.” ” Societe Generale.
In September 27-October. 4 Poll, Asia’s third-largest economy, estimated year-on-year economic growth at 7.8%, 6.0% and 5.8% for Q3, Q4 and Q1 2022, respectively. A July survey offered higher forecasts for Q3 and Q1 2022.
This follows a 20.1% expansion in the April-June quarter, the highest since the mid-1990s, which was helped by a much lower base – the start of the pandemic in the prior year.
Gross Domestic Product (GDP) growth (INGDPQ=ECI) is estimated to average 9.2% in this financial year. In the next financial year, growth is seen at 9.7% and 7.1% for the first two quarters and 6.5% and 6.4% for the last two quarters, averaging 7.0% during 2022/23.
Those forecasts are largely unaffected by the July election.
When asked about the greater exposure to those numbers for the rest of the fiscal year, 23 of 34, or more than two-thirds of the respondents, said delayed recovery with limited decline. Eight said a strong recovery was followed by an upgrade, and the remaining three reported weak and further downgrades likely.
Kundu said, “But with inflation expected to remain high… persisting with over-accommodative monetary policy when the economy is in a recovery phase could lead to a recession, affecting recovery.” can.”
According to the survey, inflation was projected to remain well above the RBI’s medium-term target of 4%, but was projected to remain below the 6% upper limit until at least the end of 2024.
The RBI has been vocal about its intent to help the government accelerate growth and said policy support all sides There is a need for nourishment to recover from a nascent and hesitation.
“It will be a long time before financial conditions tighten and policy rates are raised. When the economy should be closer to health, rate hikes will be on the agenda,” said Shilan Shah at Capital Economics.
“The big picture is that the policy will remain very lenient for several months now.”
Even as uncertainty remains about the pace of recovery, the Indian stock market appears to be taking aback as share prices hit record highs repeatedly.
Investors have been bullish on Indian stocks as businesses and dynamics recover from the devastating second wave of COVID-19 during April-May.
With the lifting of major restrictions, the situation of the unemployed has also improved. 17 out of 27 respondents said that unemployment with low or very low risk will increase in the coming year. The rest said there was a high risk.
(For other stories from the Businesshala Global Economic Survey:)