Indian economy likely to register 9.5% growth this fiscal: Swiss brokerage UBS Securities

The economy is likely to register a 9.5 percent growth this fiscal over 7.3 percent contraction last year, as the ongoing recovery is faster and more credible than earlier foreseen, according to a foreign brokerage report.

It will gather more momentum in the second half of the current fiscal, but will slow down to 7.7 percent next financial year, it added. The government has budgeted for a 10.5 percent growth this fiscal, but the Reserve Bank has scaled it down to 9.5 percent. Ravaged by the pandemic, the economy tanked 7.3 percent last fiscal, the worst and the third contraction on record.

Swiss brokerage UBS Securities India expects the economy to gain momentum in the second half on cyclical tailwinds, including pent-up demand and favorable external demand.

We expect real GDP to grow at 9.5 percent in FY22, but to lose the momentum to 7.7 percent next fiscal. We expect growth to gain momentum in the second half on cyclical tailwinds including pent-up demand, especially after more people are vaccinated, favorable external demand as exports are over 25 percent the pre-pandemic level) and higher government spending and the likely resultant spike in Capex, Tanvee Gupta Jain, chief economist at UBS Securities India said in a report on Monday. However, she said that the recent supply-side disruptions, including high global commodity prices, especially oil and domestic coal shortages, could weigh on the fragile recovery.