Moody's Investors Service on Thursday raised India's growth forecast to 9.5 per cent for the calendar year 2022 and to 8.4 per cent for the coming fiscal beginning April 1, even as it flagged high oil prices and supply distortions as a drag on growth. In November last year, Moody's had forecast India's economy to expand 7.9 per cent in the 2022-23 fiscal beginning April 1. As per official estimates, Indian economy is estimated to grow at 9.2 per cent in the current fiscal ending March 31. The speed of the recovery from the first lockdown-led contraction in the June quarter of 2020 and subsequently in the June quarter of 2021 during the Delta wave was stronger than expected.
With most remaining restrictions now being lifted with the improvement in the COVID situation, including the reopening of schools and colleges for in-person instruction across various states, the country is on its way to normalcy. The 2022 union budget prioritises growth, with a 36 per cent increase in allocation to capital expenditure to 2.9 per cent of GDP for the fiscal year 2022-23, which the government hopes will crowd in private investment. With the RBI leaving interest rates unchanged at its February meeting, monetary policy remains supportive. "We expect the RBI to begin tightening liquidity measures and to raise the repo rate in the second half of this year, provided that growth momentum continues to improve," Moody's said.
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