India’s FY22 GDP growth rate is now expected at 9.6 per cent, lower than an earlier estimate of 10.1 per cent, India Ratings and Research (Ind-Ra) said on Friday.

According to the ratings agency, given the speed and scale of Covid 2.0, the earlier GDP growth estimated at 10.1 per cent for FY22 is unlikely to hold.

Now, Ind-Ra expects GDP growth to come in at 9.6 per cent (base case) in FY22.

This rate is, however, contingent upon India vaccinating its entire adult population by December 31, 2021.

“Average daily vaccination during June 1-20 was 3.2 million, which rose to 8.73 million on June 21. If the pace of vaccination is maintained close to the June 21 level, India will be able to achieve the aforesaid target.

“In case the vaccination target gets delayed by three months, either due to slow pace of vaccination or non-availability of vaccines, the FY22 GDP growth will slip further down to 9.1 per cent (alternate scenario),” Ind-Ra said.

As per Ind-Ra, the Indian economy was witnessing a consumption slowdown even before the Covid-19 pandemic.

“PFCE collapsed to negative 26.2 per cent in 1QFY21. Since then it has recovered and was expected to gather pace this fiscal. However, it has received another push back from Covid 2.0.

“The push back to consumption demand is expected to be more pronounced in the rural areas as Covid 2.0, unlike Covid 1.0, has spread to the rural areas as well,” Ind-Ra said.

Consequently, Ind-Ra expects PFCE growth to come in at 10.8 per cent in FY22.

Besides, it said that a near-normal monsoon in 2021 means a third consecutive year of healthy agricultural production or income.

“Although agricultural income now constitutes only about one-third of the rural income, given its backward-forward linkage with several non-agricultural rural activities, together they provide livelihoods to a large portion of the rural population.

“Ind-Ra expects agricultural growth to come in at 3 per cent in FY22. On the other hand, the industrial sector is expected to grow at 10.9 per cent YoY in FY22, because unlike Covdi 1.0, industries were allowed to remain operational during Covid 2.0 lockdowns though with Covid protocols or lower employee headcounts,” it said.

In addition, Ind-Ra said that services, especially segments such as aviation, tourism, hotels, sports, entertainment and hospitality, which are still weathering the storm, is expected to grow at 10.4 per cent in FY22, “again chiefly due to the low base of last year”.