NITI sees 10% growth on strong agri recovery

New Delhi: Indian economy is expected to grow by more than 10 per cent in the current fiscal supported by a record Kharif crop and bright Rabi prospects, Niti Aayog Vice-Chairman Rajiv Kumar has said on Thursday. Kumar, however, cautioned that inflation is emerging as a key risk to sustainable global economic recovery with supply chain constraints and rising energy prices.

"We expect India's real GDP growth in FY22 to exceed 10 per cent supported by a record kharif crop and bright Rabi prospects. This will boost rural demand and spur the revival in the manufacturing sector with improving capacity utilisation," he wrote in Niti Aayog's newsletter 'arthNITI'.

According to Kumar, significant increase in exports will also boost the economic growth and employment generation.

"Gradual pickup in contact-intensive services sector is further likely to support the growth momentum. India achieved the landmark milestone of administering one billion Covid-19 vaccine doses on October 21, he said.

The Niti Aayog Vice-Chairman also noted that the rapid vaccination drive across the country will ensure that the risk of future wave is minimised.

The Reserve Bank of India (RBI) has lowered the growth projection for the current financial year to 9.5 per cent from 10.5 per cent estimated earlier, while the IMF has projected a growth of 9.5 per cent in 2021 and 8.5 per cent in the next year.

Kumar pointed out that India sustained its pace of economic recovery in September 2021 as reflected by acceleration in manufacturing PMI at 53.7 (52.3 in August 2021) offset by a modest deceleration in services PMI at 55.2 (56.7 in August 2021).

"Other key high frequency indicators -- power consumption, railway freight, GST collections, e-way bills, etc. -- also show continued pickup in economic activity," he said.

The eminent economist said Index of Industrial Production (IIP) witnessed growth of 11.9 per cent YoY in August 2021 with core sector output growth of 11.6 per cent YoY reflecting strong activity in industrial and infrastructure sectors.

While trade growth is rebounding strongly, with much stronger imports than exports, reflecting India's robust economic recovery, Kumar said higher than expected revenue trends driven by both direct and indirect taxes have provided the much-needed fiscal space for required policy action.

Citing latest projections by the International Monetary Fund, Kumar said the global economy is on the recovery path with projected growth of 5.9 per cent in 2021.

According to the IMF, the real GDP of advanced economies is projected to expand by 5.2 per cent whereas emerging market and developing economies are expected to grow by 6.4 per cent.