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Amid concerns over the Omicron variant of COVID-19, rating agency ICRA in its latest report has said that India’s real gross domestic product (GDP) is likely to maintain a 9% growth rate in fiscal 2022 and 2023. The Indian economy grew at 8.4% in the second quarter of the current fiscal, as against a growth of 20.1% in the April-June quarter.

The rating agency said ‘the available data for Q3 FY2022 does not offer convincing evidence that the Monetary Policy Committee's (MPC's) criteria of a durable and sustainable growth recovery has been met, to confirm a change in the Monetary Policy stance to neutral in February 2022’. It believes that rising consumption will push capacity utilisation above the crucial threshold of 75 per cent by the end of 2022, which should then trigger a broad-based pick-up in private sector investment activity in 2023. The agency also expects the visibility of tax revenue growth to spur faster government spending in 2022.

Icra Chief Economist Aditi Nayar said in the report ‘we are maintaining our forecast of a 9% GDP expansion in FY2022, with a clear K-shaped divergence amongst the formal and informal parts of the economy, and the large gaining at the cost of the small.’ He added ‘looking ahead, we expect the economy to maintain a similar 9 per cent growth in FY2023’. She expects the percentage of double-vaccinated adults to rise to 85-90 per cent by March 2022. She also said while the announcement of booster doses and vaccines for the 15-18 age group is welcome, it remains to be seen whether all the existing vaccines would offer adequate protection against the new Omicron variant to avert a third wave in India.