Economic growth is expected to be 8.5 percent in the current financial year: ICRA

“The impact of the second wave of the Kovid-19 epidemic and the lockdown in different states for its prevention was seen in various indicators with high frequency during April-May 2021. No new cases have come down and restrictions are being relaxed.

NEW DELHI: Rating agency Icra has said that the country's Gross Domestic Product (GDP) growth rate can be 8.5 percent in the financial year 2021-22 due to the decreasing cases of Kovid-19 infection and easing of restrictions.

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According to the rating agency, the Gross Value Added (GVA) at base price (2011-12 constant price) is estimated at 7.3 percent in the current fiscal. Aditi Nair, Principal Economist, ICRA, said, “The impact of the second wave of the Kovid-19 epidemic and the lockdown in different states for its prevention was seen in various indicators with high frequency during April-May 2021. No new cases have come down and restrictions are being relaxed. In such a situation, we estimate that the GDP growth rate of the country will be 8.5 percent in the financial year 2021-22.

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The rating agency also said that the economy will perform well in the third and fourth quarters if the vaccination campaign picks up in view of the change in vaccine policy and announcement of procurement at the central level. With this, the GDP growth rate can go up to 9.5 percent in the current financial year.

It is noteworthy that in the financial year 2020-21, the country's GDP has declined by 7.3 percent. Data released by the Reserve Bank of India (RBI) last week projected the growth rate to be 9.5 percent during the current financial year. The rating agency also said that the negative impact of the second wave on consumer sentiment and demand could be prolonged. An increase in expenditure on health and fuel will reduce disposable income for the people. Due to this, the suppressed demand in the financial year 2021-22 will be less than that of 2020-21.

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