1.ICRA raises FY22 growth estimate to 9%

Potential third wave, efficacy of existing vaccines against possible new variants remain key risks: Nayar

Rating agency ICRA has bumped up GDP growth forecast for 2021-22 to 9% from 8.5%, citing better prospects for the second half of the year due to a ramp-up in COVID-19 vaccination and healthy Kharif estimates.

A potential third wave, and whether existing vaccines can protect against new variants that might emerge, remain key risks, ICRA chief economist Aditi Nayar said. ICRA expects higher government spending to boost growth in the second half of the year, in contrast to the first quarter when government consumption expenditure had trailed last year’s levels. On the vaccination drive, ICRA estimates almost three-fourths of Indian adults could receive their second COVID-19 vaccine shot by the end of 2021, if the average of 7.9 million daily doses between September 1 and 26, can be sustained. This should help boost demand for contact-intensive services in the fourth quarter, although some services such as business travel may revert to pre-Covid levels with a longer lag, the agency pointed out.

Ms. Nayar said increasing vaccine coverage would boost confidence and re-energise demand for contact-intensive services, thus helping revive parts of the economy worst affected by the pandemic.

While industrial trends remained lacklustre in September, indicated by a flattening out of GST e-way bills, and dampened electricity demand due to heavy rains, ICRA noted this was also likely to distort trends in mining and construction. Agriculture, though, is expected to do better than anticipated.

“Late sowing has helped bring Kharif acreage nearly at par with last year’s record area. The first Advance Estimates of crop production signal a robust rise in Kharif output, barring coarse cereals and oilseeds, quelling concerns raised by the uneven monsoon and episodes of flooding,” she said.

Credit Rating reflects the payback abilities of individuals or companies. Indian credit rating industry mainly comprises of CRISIL, ICRA, FITCH, CARE, ONICRA, and SMERA. A few years back Economic Survey had criticized the methodologies adopted by credit rating agencies. This article has given brief information about well-known credit agencies.