Domestic rating agency Icra Ratings on Monday said it expects the country's real gross domestic product (GDP) to grow by 10.1 per cent in FY2022.

It, however, said the value of GDP in the next financial year will only mildly surpass the level that had been recorded in FY2020.

"After a 7.8 per cent pandemic-driven shrinkage in the ongoing fiscal (FY2021), India's real GDP is projected to record a growth of 10.1 per cent in FY2022. The seemingly-sharp expansion will be led by the continued normalisation in economic activities as the roll-out of COVID-19 vaccines gathers traction, as well as the low base," the agency principal economist Aditi Nayar said in a report.

The agency's principal economist expects a multi-speed recovery in FY2022, with the contact-intensive sectors, discretionary consumption and investment by the private sector trailing the rest of the economy, in the arduous march back to attaining, and sustaining, pre-COVID levels.

"On a sobering note, we project the aggregate value of the Indian GDP in real terms in FY2022, to be only mildly higher than the level recorded in FY2020," Nayar added.

The agency expects the headline CPI inflation to decline to 4.6 per cent in FY2022 from 6.4 per cent in FY2021, while exceeding the mid-point of the Monetary Policy Committee's (MPC's) medium target of 4 per cent, for the third consecutive year.

A favourable base would moderate the retail food inflation to an average of 4.7 per cent in FY2022 from 8 per cent in FY2021, despite the pressures from edible oils, and protein items such as pulses, it said.

With the CPI inflation expected to remain above the MPC's 4 per cent target during FY2022, the agency expects an extended pause for the repo rate.

It expects the "stance of monetary policy to be changed to neutral from accommodative in the August 2021 policy review or later, only after there is greater certainty on the durability of the awaited economic revival." The report said RBI may initiate steps, in a calibrated manner, to reduce the magnitude of the systemic liquidity surplus.

Nayar said the government security yields will take a cue from the size of the borrowing programme of the central and the state governments for FY2022, as well as the outlook for inflation. The agency expects the twin deficits to display a divergent trend in FY2022.

"As the revenue shock ebbs, we project India's general government (centre + states) fiscal deficit to moderate to 8.5 per cent of GDP in FY2022 from the 12-12.5 per cent of the GDP expected in the current year," Nayar said.

However, with imports expected to revive in tune with the anticipated recovery in domestic demand, the current account balance is forecast to slip back into a modest deficit of USD 15-20 billion (or 0.6 per cent of GDP) in FY2022 from a surplus of USD 35-40 billion in FY2021, she said.

Domestic rating agency Icra Ratings on Monday said it expects the country's real gross domestic product (GDP) to grow by 10.1 per cent in FY2022. It, however, said the value of GDP in the next financial year will only mildly surpass the level that had been recorded in FY2020.

Domestic rating agency Icra Ratings on Monday said it expects the country's real gross domestic product (GDP) to grow by 10.1 per cent in FY2022. It, however, said the value of GDP in the next financial year will only mildly surpass the level that had been recorded in FY2020. "After a 7.8 per cent pandemic-driven shrinkage in the ongoing fiscal (FY2021), India's real GDP is projected to record a growth of 10.1 per cent in FY2022. The seemingly-sharp expansion will be led by the continued normalisation in economic activities as the roll-out of COVID-19 vaccines gathers traction, as well as the low base," the agency principal economist Aditi Nayar said in a report. The agency's principal economist expects a multi-speed recovery in FY2022, with the contact-intensive sectors, discretionary consumption and investment by the private sector trailing the rest of the economy, in the arduous march back to attaining, and sustaining, pre-COVID levels. "On a sobering note, we project the aggregate value of the Indian GDP in real terms in FY2022, to be only mildly higher than the level recorded in FY2020," Nayar added. The agency expects the headline CPI inflation to decline to 4.6 per cent in FY2022 from 6.4 per cent in FY2021, while exceeding the mid-point of the Monetary Policy Committee's (MPC's) medium target of 4 per cent, for the third consecutive year. A favourable base would moderate the retail food inflation to an average of 4.7 per cent in FY2022 from 8 per cent in FY2021, despite the pressures from edible oils, and protein items such as pulses, it said. With the CPI inflation expected to remain above the MPC's 4 per cent target during FY2022, the agency expects an extended pause for the repo rate. It expects the "stance of monetary policy to be changed to neutral from accommodative in the August 2021 policy review or later, only after there is greater certainty on the durability of the awaited economic revival." The report said RBI may initiate steps, in a calibrated manner, to reduce the magnitude of the systemic liquidity surplus. Nayar said the government security yields will take a cue from the size of the borrowing programme of the central and the state governments for FY2022, as well as the outlook for inflation. The agency expects the twin deficits to display a divergent trend in FY2022. "As the revenue shock ebbs, we project India's general government (centre + states) fiscal deficit to moderate to 8.5 per cent of GDP in FY2022 from the 12-12.5 per cent of the GDP expected in the current year," Nayar said. However, with imports expected to revive in tune with the anticipated recovery in domestic demand, the current account balance is forecast to slip back into a modest deficit of USD 15-20 billion (or 0.6 per cent of GDP) in FY2022 from a surplus of USD 35-40 billion in FY2021, she said.

India's real GDP to expand by 10.1 per cent in FY2022: ICRA 

India's current account deficit (CAD) is expected to remain largely steady at 16 billion to 17 billion dollars or 2.3 per cent of GDP in the first quarter (April to June) of the current fiscal year 2019-20 despite the recent contraction in merchandise exports and imports, according to investment information firm ICRA.

This de-growth is likely to persist in the immediate term, given the year-on-year decline in crude oil prices and impact of recent customs duty hike on gold and precious metals.

Such factors in addition to the threat imposed by global trade wars as well as sluggish domestic demand are likely to restrict the overall growth of both merchandise exports and imports to low single digits.&nbsp;

ICRA forecasts India`s CAD to widen to 63 billion to 68 billion dollars in FY20 from 57.2 billion dollars in FY19 while remaining steady at around 2.1 per cent of GDP.

"The widening in the merchandise trade deficit is likely to be absorbed by a mildly higher services trade surplus and remittance flows in Q1 FY20," said ICRA`s Principal Economist Aditi Nayar.

&nbsp;"As a result, the CAD is expected to remain largely steady at 16 to 17 billion dollars or 2.3 per cent of GDP in the just-concluded quarter relative to 15.8 billion dollars in Q1 FY19."

Recently released data indicates that India`s merchandise exports and imports contracted by 1.7 per cent and 0.3 per cent respectively in Q1 FY20."The prevailing year-on-year decline in crude oil prices and a temporary dip in gold imports following the tax changes introduced in the Union Budget may well result in a contraction in aggregate merchandise imports as well as exports in July 2019," said Nayar.

"However, both these factors will contribute to a sizeable reduction in the size of the trade deficit in July 2019 to about 16 to 16.5 billion dollars from 18.6 billion dollars recorded on July 2018, which was the highest monthly print for FY19," she said in a statement.

An anticipated decline in the average price of the Indian basket of crude oil to 65 dollars a barrel in FY20 from 70 dollars a barrel in FY19, the risk related to global trade wars and signs of moderation in domestic consumption and industrial demand will exert a drag on the headline pace of expansion of merchandise exports and imports in the ongoing year.&nbsp;

Moreover, high gold prices may restrict growth in demand for imports of the precious metal.&nbsp;

At present, ICRA anticipates that merchandise exports and imports will grow by a low two to three per cent and four to five per cent respectively in FY20.&nbsp;

Nevertheless, with the pace of growth of inbound shipments likely to exceed that of exports.

ICRA expects the merchandise trade deficit to widen to about 193 billion to 198 billion dollars in FY20 from 180 billion dollars in FY18.&nbsp;

A revival in gold imports closer to the festive season may push up the CAD size to 28 billion to 30 billion dollars in the second half of FY20, relative to the 21.5 billion dollars recorded in the second half of FY19.

Overall, ICRA expects India`s CAD to widen at an absolute level for the third year in a row to 63 billion to 68 billion dollars in FY20 from 57.2 billion dollars in FY19 &nbsp;while remaining steady at around 2.1 per cent of the GDP.

A sustained pick-up in the price of crude oil, which appears to be an unlikely scenario at present, remains a risk to the CAD size.&nbsp;

According to ICRA, every one dollar a barrel increase in the average price of crude oil in FY20 is likely to expand the CAD by about 1.6 billion dollars.

India's current account deficit (CAD) is expected to remain largely steady at 16 billion to 17 billion dollars or 2.3 per cent of GDP in the first quarter (April to June) of the current fiscal year 2019-20 despite the recent contraction in merchandise exports and imports, according to investment information firm ICRA.

India's current account deficit (CAD) is expected to remain largely steady at 16 billion to 17 billion dollars or 2.3 per cent of GDP in the first quarter (April to June) of the current fiscal year 2019-20 despite the recent contraction in merchandise exports and imports, according to investment information firm ICRA. This de-growth is likely to persist in the immediate term, given the year-on-year decline in crude oil prices and impact of recent customs duty hike on gold and precious metals. Such factors in addition to the threat imposed by global trade wars as well as sluggish domestic demand are likely to restrict the overall growth of both merchandise exports and imports to low single digits. ICRA forecasts India`s CAD to widen to 63 billion to 68 billion dollars in FY20 from 57.2 billion dollars in FY19 while remaining steady at around 2.1 per cent of GDP. "The widening in the merchandise trade deficit is likely to be absorbed by a mildly higher services trade surplus and remittance flows in Q1 FY20," said ICRA`s Principal Economist Aditi Nayar. "As a result, the CAD is expected to remain largely steady at 16 to 17 billion dollars or 2.3 per cent of GDP in the just-concluded quarter relative to 15.8 billion dollars in Q1 FY19." Recently released data indicates that India`s merchandise exports and imports contracted by 1.7 per cent and 0.3 per cent respectively in Q1 FY20."The prevailing year-on-year decline in crude oil prices and a temporary dip in gold imports following the tax changes introduced in the Union Budget may well result in a contraction in aggregate merchandise imports as well as exports in July 2019," said Nayar. "However, both these factors will contribute to a sizeable reduction in the size of the trade deficit in July 2019 to about 16 to 16.5 billion dollars from 18.6 billion dollars recorded on July 2018, which was the highest monthly print for FY19," she said in a statement. An anticipated decline in the average price of the Indian basket of crude oil to 65 dollars a barrel in FY20 from 70 dollars a barrel in FY19, the risk related to global trade wars and signs of moderation in domestic consumption and industrial demand will exert a drag on the headline pace of expansion of merchandise exports and imports in the ongoing year. Moreover, high gold prices may restrict growth in demand for imports of the precious metal. At present, ICRA anticipates that merchandise exports and imports will grow by a low two to three per cent and four to five per cent respectively in FY20. Nevertheless, with the pace of growth of inbound shipments likely to exceed that of exports. ICRA expects the merchandise trade deficit to widen to about 193 billion to 198 billion dollars in FY20 from 180 billion dollars in FY18. A revival in gold imports closer to the festive season may push up the CAD size to 28 billion to 30 billion dollars in the second half of FY20, relative to the 21.5 billion dollars recorded in the second half of FY19. Overall, ICRA expects India`s CAD to widen at an absolute level for the third year in a row to 63 billion to 68 billion dollars in FY20 from 57.2 billion dollars in FY19 while remaining steady at around 2.1 per cent of the GDP. A sustained pick-up in the price of crude oil, which appears to be an unlikely scenario at present, remains a risk to the CAD size. According to ICRA, every one dollar a barrel increase in the average price of crude oil in FY20 is likely to expand the CAD by about 1.6 billion dollars.

Current account deficit to print at 16-17 billion dollar in Q1 FY20: ICRA

India's current account deficit (CAD) is expected to remain largely steady at 16 billion to 17 billion dollars or 2.3 per cent of GDP in the first quarter (April to June) of the current fiscal year 2019-20 despite the recent contraction in merchandise exports and imports, according to investment information firm ICRA.

This de-growth is likely to persist in the immediate term, given the year-on-year decline in crude oil prices and impact of recent customs duty hike on gold and precious metals.

Such factors in addition to the threat imposed by global trade wars as well as sluggish domestic demand are likely to restrict the overall growth of both merchandise exports and imports to low single digits. ICRA forecasts India's CAD to widen to 63 billion to 68 billion dollars in FY20 from 57.2 billion dollars in FY19 while remaining steady at around 2.1 per cent of GDP.

"The widening in the merchandise trade deficit is likely to be absorbed by a mildly higher services trade surplus and remittance flows in Q1 FY20," said ICRA's Principal Economist Aditi Nayar.&nbsp;

"As a result, the CAD is expected to remain largely steady at 16 to 17 billion dollars or 2.3 per cent of GDP in the just-concluded quarter relative to 15.8 billion dollars in Q1 FY19."Recently released data indicates that India's merchandise exports and imports contracted by 1.7 per cent and 0.3 per cent respectively in Q1 FY20."The prevailing year-on-year decline in crude oil prices and a temporary dip in gold imports following the tax changes introduced in the Union Budget may well result in a contraction in aggregate merchandise imports as well as exports in July 2019," said Nayar."However, both these factors will contribute to a sizeable reduction in the size of the trade deficit in July 2019 to about 16 to 16.5 billion dollars from 18.6 billion dollars recorded in July 2018, which was the highest monthly print for FY19," she said in a statement.

An anticipated decline in the average price of the Indian basket of crude oil to 65 dollars a barrel in FY20 from 70 dollars a barrel in FY19, the risk related to global trade wars and signs of moderation in domestic consumption and industrial demand will exert a drag on the headline pace of expansion of merchandise exports and imports in the ongoing year. Moreover, high gold prices may restrict growth in demand for imports of the precious metal.&nbsp;

At present, ICRA anticipates that merchandise exports and imports will grow by a low two to three per cent and four to five per cent respectively in FY20. Nevertheless, with the pace of growth of inbound shipments likely to exceed that of exports.ICRA expects the merchandise trade deficit to widen to about 193 billion to 198 billion dollars in FY20 from 180 billion dollars in FY18. A revival in gold imports closer to the festive season may push up the CAD size to 28 billion to 30 billion dollars in the second half of FY20, relative to the 21.5 billion dollars recorded in the second half of FY19.&nbsp;

Overall, ICRA expects India`s CAD to widen at an absolute level for the third year in a row -- to 63 billion to 68 billion dollars in FY20 from 57.2 billion dollars in FY19 -- while remaining steady at around 2.1 per cent of the GDP.&nbsp;

A sustained pick-up in the price of crude oil, which appears to be an unlikely scenario at present, remains a risk to the CAD size.&nbsp;

According to ICRA, every one dollar a barrel increase in the average price of crude oil in FY20 is likely to expand the CAD by about 1.6 billion dollars.&nbsp;

India's current account deficit (CAD) is expected to remain largely steady at 16 billion to 17 billion dollars or 2.3 per cent of GDP in the first quarter (April to June) of the current fiscal year 2019-20 despite the recent contraction in merchandise exports and imports, according to investment information firm ICRA. This de-growth is likely to persist in the immediate term, given the year-on-year decline in crude oil prices and impact of recent customs duty hike on gold and precious metals. Such factors in addition to the threat imposed by global trade wars as well as sluggish domestic demand are likely to restrict the overall growth of both merchandise exports and imports to low single digits. ICRA forecasts India's CAD to widen to 63 billion to 68 billion dollars in FY20 from 57.2 billion dollars in FY19 while remaining steady at around 2.1 per cent of GDP. "The widening in the merchandise trade deficit is likely to be absorbed by a mildly higher services trade surplus and remittance flows in Q1 FY20," said ICRA's Principal Economist Aditi Nayar. "As a result, the CAD is expected to remain largely steady at 16 to 17 billion dollars or 2.3 per cent of GDP in the just-concluded quarter relative to 15.8 billion dollars in Q1 FY19."Recently released data indicates that India's merchandise exports and imports contracted by 1.7 per cent and 0.3 per cent respectively in Q1 FY20."The prevailing year-on-year decline in crude oil prices and a temporary dip in gold imports following the tax changes introduced in the Union Budget may well result in a contraction in aggregate merchandise imports as well as exports in July 2019," said Nayar."However, both these factors will contribute to a sizeable reduction in the size of the trade deficit in July 2019 to about 16 to 16.5 billion dollars from 18.6 billion dollars recorded in July 2018, which was the highest monthly print for FY19," she said in a statement. An anticipated decline in the average price of the Indian basket of crude oil to 65 dollars a barrel in FY20 from 70 dollars a barrel in FY19, the risk related to global trade wars and signs of moderation in domestic consumption and industrial demand will exert a drag on the headline pace of expansion of merchandise exports and imports in the ongoing year. Moreover, high gold prices may restrict growth in demand for imports of the precious metal. At present, ICRA anticipates that merchandise exports and imports will grow by a low two to three per cent and four to five per cent respectively in FY20. Nevertheless, with the pace of growth of inbound shipments likely to exceed that of exports.ICRA expects the merchandise trade deficit to widen to about 193 billion to 198 billion dollars in FY20 from 180 billion dollars in FY18. A revival in gold imports closer to the festive season may push up the CAD size to 28 billion to 30 billion dollars in the second half of FY20, relative to the 21.5 billion dollars recorded in the second half of FY19. Overall, ICRA expects India`s CAD to widen at an absolute level for the third year in a row -- to 63 billion to 68 billion dollars in FY20 from 57.2 billion dollars in FY19 -- while remaining steady at around 2.1 per cent of the GDP. A sustained pick-up in the price of crude oil, which appears to be an unlikely scenario at present, remains a risk to the CAD size. According to ICRA, every one dollar a barrel increase in the average price of crude oil in FY20 is likely to expand the CAD by about 1.6 billion dollars.

Current account deficit to print at $16-17 billion in Q1 FY20: ICRA

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