A season of opportunity for the Indian economy – The New Indian Express


The NSO’s first advance estimate of national income pegs India’s GDP growth at 9.2% in FY22, from a contraction of 7.3% in FY21. economy likely surpassing pre-pandemic levels by March, this looks like a season of opportunity. While the IMF suggests that India could be the fastest growing Asian economy in 2022 in real terms, and the only one on the continent to grow in double digits in nominal terms, the market research firm Jefferies believes the country has already entered an economic supercycle. by a decisive turnaround in the real estate cycle. Similarly, IHS Markit Ltd predicts that India is likely to overtake Japan as Asia’s second-largest economy by 2030. Currently, we are the world’s sixth-largest economy, behind the United States, China, Japan, Germany and the UK.

The projected growth rate of 9.2% quickens the pulse, but it should be noted that it is on a low base. Moreover, the most important component, namely consumption, is not entirely out of the woods. The service sector, the lifeblood of any economy, is struggling desperately overnight. And both stare at the enemy (Omicron infections) fearful of lockdown-like restrictions, which could knock them out three times. Even if the economy somehow manages to escape the effects of a potential third wave, there is another proverbial elephant in the room: inflation. As Morgan Stanley notes, the significant rise in prices in major economies, coupled with supply chain disruptions and labor shortages, is giving a clear signal to central banks to raise rates. But such a decision could put an end to the recovery, in particular because consumption and investment are barely picking up.

As we have seen, China, which has withdrawn its political support and tightened regulations, suffered a mini-downturn last year. As India’s economy rebounds strongly, helped by structural reforms and rising immunization rates, some key elements of a business cycle have yet to complete a 360 degree turn. Put simply, 2022 could well be the year of the great rebalancing involving the central bank to deliver calibrated easing followed by a fiscal plan that prioritizes spending with foresight to avoid another economic coma.


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