NEW DELHI: India grew at the fastest pace of any major economy in the July-September quarter but economists said disruptions from the emerging Omicron coronavirus variant risked slowing the recovery, especially given India’s low vaccination rates.
Asia’s third-largest economy has rebounded strongly from last year’s deep pandemic-induced slump, boosted by vaccinations and stronger government spending, economists said. But new COVID-19 variants, a global slowdown and rising manufacturing prices all pose risks to growth.
Gross domestic product expanded 8.4% in the September quarter from a year earlier, statistics ministry data showed on Tuesday, in line with 8.4% growth predicted in a Reuters poll and compared with a 20.1% expansion in the previous quarter.
“Data clearly shows that corporate income and profit are above the pre-pandemic level,” K.V. Subramanian, chief economist at the finance ministry told reporters after the data release.
He said double-digit growth was expected in the current fiscal year, which ends in April 2022, with growth of 6.5% to 7% predicted for the following fiscal year.
The International Monetary Fund has forecast 2021 economic growth of 9.5% in India compared to a forecast for China of 8%. The Reserve Bank of India’s (RBI) monetary policy committee meets on Dec. 6-8. With households increasingly worried about inflation, policymakers are expected to speed up measures to suck up excess liquidity before normalising interest rates.
“With growth revival and sticky core inflation, we expect RBI to undertake phased withdrawal of liquidity and start raising the policy rates soon,” said Sujan Hajra, chief economist at Anand Rathi Securities, Mumbai.