The Organisation for Economic Co-operation and Development (OECD) on Monday cut India’s growth projection for FY22 to 9.9% from 12.6% estimated in March as a resurgence of covid cases and lockdowns have threatened to stall the country’s nascent economic recovery.

"In India, the rapid rebound in activity since mid-2020 has paused with resurgence of the Covid-19 pandemic and renewed localised containment measures raising uncertainty and hitting mobility," it said in its latest Economic Outlook.

 Higher commodity prices have also pushed up inflation, reducing household real incomes. Monetary policy remains accommodative with plans for gradual normalisation being put on hold, but scope for additional fiscal support is limited.

"Provided the pandemic can be contained quickly, GDP growth could still be around 10% in FY 2021-22 and 8.25% in FY 2022-23 with pent-up consumer demand, easy financial conditions and strong external market growth helping the recovery to gain momentum." On the other hand, prospects for the world economy have brightened but the recovery is likely to remain uneven and, crucially, dependent on the effectiveness of public health measures and policy support, said OECD.

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