CRISIL Ratings positions real GDP growth at 7.8%

The growth rate is expected to be bolstered by reduced fiscal consolidation and increased capital expenditure

February 2, 2022

The real GDP growth rate mentioned in the Economic Survey has been documented at 8.5%

Limited global monetary and fiscal stimulus coupled with supply chain gaps can impact Indian exports.

CRISIL projects nominal growth to be between 12-13% and headline inflation to average at 5.2%

The pace of rural employment is to be accelerated in order to better spending and investment patterns.

Ratings agency CRISIL presented real GDP growth at 7.8% as against the figure of 8.5% notified in the Economic Survey 2022. The agency noted that the budgetary measures aimed at increasing capital expenditure and the reduced pace of fiscal consolidation could have a positive effect on the economy. The global economic slowdown owing to limited potential for fiscal and monetary stimulus is expected to impact India’s export growth. Raw material shortages especially in the semiconductor space, supply chain disruptions and the increase in the prices of crude oil are also anticipated. 

CRISIL also projected headline inflation to average at 5.2% and nominal growth to be between 12-13% as against the Budget Estimate of 11.1%. The agency highlighted the importance of accelerating the pace of rural employment in order to boost consumption patterns and eventually kickstart the investment cycle. Revenue challenges are to be mitigated through the management of divestment targets. The Budget for FY22-23 accommodates a 35% increase in capital expenditure but expenditure cuts for Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) from Rs 98,000 crore in FY22 to Rs 73,000 crore for FY23. Budget cuts towards the procurement of paddy and wheat are also in place.