The impact of Covid-19 pandemic and lockdown on the economy, although subsiding now, will continue to delay normalization of economic activities in contact intensive sectors till the mass vaccination and herd immunity becomes a reality, India Ratings and Research (Ind-Ra) said.

according to India Ratings Research, it says that although economic recovery in coming financial year beginning April 1 (FY22) on a year-on-year basis will be V-shaped, the size of GDP will barely surpass the level attained in 2019-20 (FY20) and be 10.6 percent lower than trend value,

Ind-Ra estimates the GDP growth will bounce back to 10.4percent year-on-year in FY22, primarily driven by the base effect. After recording negative growth during 9M FY21, GDP growth will finally turn positive at 0.3percent in 4Q FY21. In the FY22 Union Budget, the government while setting aside fiscal conservatism decided to provide much-needed support to demand side of economy which had been missing in the Atmanirbhar package announced earlier.

As a result, Ind-Ra expects the government final consumption expenditure to grow 10.1percent in FY22. Although the private final consumption expenditure was witnessing a slowdown even before the imposition of Covid-19 induced lockdown, it is expected to grow by 11.2 percent in FY22 led by essentials (pharma, healthcare and telecom) followed by non-discretionary consumer goods, infrastructure (chemicals, oil and gas, IT, sugar and agri-commodities), industrial goods and cyclical sectors (power, iron and steel, logistics, cement, construction, automobiles and automobile ancillaries).

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