A chance to support growth, fiscal consolidation

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The National Statistical Office (NSO) released the first advance national accounts estimates for 2021-22 on January 7, 2022. India’s real GDP growth in 2021-22 is estimated at 9.2%, that is 30 basis points lower than the projection by the Reserve Bank of India and the International Monetary Fund (IMF) projection of 9.5%. In an earlier analysis (The Hindu, December 18, 2021, The challenge of achieving 9.5% growth rate), we had considered some of the ongoing challenges to the 2021-22 growth forecast, indicating a possible decline. The adverse effect of the third wave of COVID-19, which is mainly affecting the last quarter of 2021-22, may call for a further downward adjustment in the growth rate to about 9%. The main sectors that have held back a more robust recovery are trade, transport, et al. on the output side and private final consumption expenditure (PFCE) on the demand side as their annual estimated 2021-22 magnitudes remain below the corresponding levels in 2019-20.

Growth prospects