OECD marginally lowered India's FY22 growth projection to 9.7%

The Organisation for Economic Co-operation and Development (OECD) has marginally lowered India's growth projection for the ongoing fiscal to 9.7%, a reduction of 20 basis points (bps), and to 7.9% for the next financial year, down 30 bps from its May forecast, citing pandemic risks.

The inter-governmental economic organisation with 38 member nations had slashed India's FY22 growth forecast to 9.9% in May from 12.6% estimated in March, as the second Covid-19 wave impacted recovery.

"The risk of lasting costs from the pandemic also persists. The output shortfall from the pre-pandemic path at the end of 2022 in the median G20 emerging-market economy is projected to be twice that in the median G20 advanced economy, and particularly high in India and Indonesia," OECD said in a report on Tuesday.

It pointed out that high-frequency indicators had rebounded. "High-frequency activity indicators, such as the Google location-based measures of retail and recreation mobility, suggest global activity continued to strengthen in recent months, helped by improvements in Europe and a marked rebound in both India and Latin America," it said.

The OECD projected a strong global growth of 5.7% this year and 4.5% in 2022, little changed from its outlook in May of 5.8% and 4.4%, respectively, on the back of continuing vaccine roll-out and a gradual resumption of economic activity, besides decisive actions by governments and central banks at the height of the crisis.

Vaccination key to recovery

The OECD report cautioned that to maintain recovery stronger international efforts were needed to provide low-income countries with the resources to vaccinate their populations, both for their own and global benefit. "Ensuring the recovery is sustained and widespread requires action on a number of fronts - from effective vaccination programmes across all countries to concerted public investment strategies to build for the future," said OECD secretary-general Mathias Cormann.