ICRA Lowers GDP Forecast For 2021-22

The extent to which restrictions are imposed across multiple states on manufacturing, as well as the availability of migrant labour will have a critical bearing on the supply disruptions that may emerge.

With sentiment souring, there may be some loss of demand in H1 FY2022, especially in the contact-intensive sectors, and some shifting of demand from H1 to H2 FY2022, rating agency ICRA has said in a report.

"For Q1 FY2022, we had earlier expected a GDP expansion of 27.5%, 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%.

We now expect Indian GDP to grow by 10-10.5% in FY2022 (earlier exp: 10-11%)," the rating agency has noted in its report.

The recent surge in Covid-19 cases has resulted in a dip in consumer confidence and reignited uncertainty regarding the near-term outlook, ICRA has noted.

"In sequential terms, the momentum eased for domestic airlines' passenger traffic in March 2021, and 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," ICRA has stated in its report.

Over the last fortnight or so, several foreign brokerages and agencies have reduced their GDP forecasts given the lockdown or imposition of curfew across states.