India’s FY22 GDP expected to grow by 8.7%: MOFSL

"Due to the ferocious second Covid wave, we have revised down our real GDP growth forecasts. Compared with our Mar'21 forecast of 30 per cent YoY, we now expect real GDP growth of 21 per cent YoY in 1QFY22, with some downward revision in 2QFY22 as well,"

New Delhi: India’s FY22 GDP is expected to grow by 8.7 per cent said Motilal Oswal Financial Services (MOFSL) in a report.

“Due to the ferocious second Covid wave, we have revised down our real GDP growth forecasts. Compared with our Mar’21 forecast of 30 per cent YoY, we now expect real GDP growth of 21 per cent YoY in 1QFY22, with some downward revision in 2QFY22 as well,”

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“However, as COVID cases have dropped sharply in Jun’21, some pent-up demand may be visible in 2HFY22 and 1HFY23.”

Consequently, MOFSL we now project real GDP growth of 8.7 per cent in FY22, down from 11.1 per cent expected earlier.

Nonetheless, it revised upwards its FY23 forecasts to 5.4 per cent now from an earlier 4 per cent.

“Although we have revised down our real growth forecasts, it is interesting to note that our nominal GDP growth forecast has actually been raised moderately for FY22 and FY23.”

“This is primarily because the GDP deflator – linked more with WPI over CPI – has been revised up to 6.5 per cent or 4.5 per cent for FY22 or FY23.”

Resultantly, it said that nominal GDP growth is now projected at 15.6 per cent for FY22 vis-a-vis 15.1 per cent earlier and 10 per cent for FY23.