Icra cuts its FY22 GDP estimate by 0.5 pc

The agency now expects the economy to grow 10-10.5 per cent in 2021-22, against the 10-11 per cent estimated earlier.

Mumbai: Domestic rating agency Icra on Tuesday cut its 2021-22 growth estimate by 0.5 per cent on the upper end, as a newer spate of lockdowns and restrictions get imposed in pockets to arrest the rising Covid-19 cases.

The agency now expects the economy to grow 10-10.5 per cent in 2021-22, against the 10-11 per cent estimated earlier. Starting with Maharashtra, a slew of other pockets in the country like Delhi have been taking to localised lockdowns to arrest the climbing Covid-19 cases, which derails economic activity.

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“For Q1 FY2022 (April-June 2021), we had earlier expected a GDP expansion of 27.5 per cent, boosted by the low base. “With the unprecedented surge in cases and evolving restrictions, the pace of GDP growth in the ongoing quarter may be tempered to 20-25 per cent,” the agency said.

The recent surge in Covid-19 cases has resulted in a dip in consumer confidence and reignited uncertainty regarding the near-term outlook, it said. In sequential terms, the momentum eased for domestic airlines’ passenger traffic in March 2021, it said.

The report added that there are indications of a similar slackening in April 2021 in vehicle registrations, electricity demand, and generation of GST e-way bills, reflecting the impact of the rise in infections and growing restrictions. In March, the economic activity recorded a broad-based and sharp improvement in the pace of y-o-y growth, relative to the previous month.

It reflected the low base related to the commencement of the Covid-19 pandemic, the early restrictions, and the subsequent nationwide lockdown in March 2020, the agency said.