India's FY22 GDP may drop to 8.2% if 2nd wave peaks by June-end

The 11 per cent GDP growth can be achieved if the country witnesses the peak of the second wave by mid-May. In this scenario, the economy will return to pre-pandemic level by September 2021 quarter. In case of moderate growth of 9.8 per cent GDP growth, the catch-up to pre-COVID-19 GDP level is pushed beyond the September quarter. Alternatively, if India sees the peak in June-end, permanent loss to GDP over the medium term will rise to about 12 per cent from 11 per cent in the base case, Crisil said in its latest report.

The intensity of the second wave infections in India has come as a surprise and is haemorrhaging the country’s healthcare infrastructure, making lockdowns and restrictions inevitable. The restrictions on movement and commerce are less stringent than the first wave, but are increasing across the country.

India’s fiscal 2021-22 will be a story of two halves, according to the agency. The first half from April to September 2021 will be supported by a base effect, but will be clouded by the pandemic’s spread. While the second half from October 2021 to March 2022 will be led by better spread economic growth, owing to increased inoculations and better adaptability to the pandemic, which would support sectors that are lagging. Also, H2 will see a stronger global growth, supporting India’s exports to an extent.

The gigantic challenges for the country are the spread of the second wave and the vaccination drive, according to the report.

Fibre2Fashion News Desk (KD)