Motilal Oswal Projected Real GDP Growth To Be 8.7% In FY22
- ByStartupStory | June 19, 2021
Motilal Oswal Financial Services has estimated GDP growth of 8.7% in FY22, lower than the forecast they did earlier of 11.1%. However, the company had revised its FY23 Forecast from 4% to 5.4%. The company said that the recent increase in industrial metals and agricultural commodities have an immense impact on the wholesale price index (WPI) over the consumer price index (CPI).
Moreover, the GDP deflator is interlinked with wholesale price index (WPI), the policy instrument for the Reserve Bank of India is Consumer Price Index (CPI). Thus, higher WPI inflation will lead nominal GDP growth higher. Motilal Oswal expects the Reserve Bank of India to shift from its accommodative stance to neutral by the year-end.
At the same time, it said, the government may not only marginally over-achieve its FY22 fiscal deficit target but also meet its spending target. There are three notable trends in FY22 so far. One: The RBI has announced a higher dividend of Rs. 40 crores to the government, Two an additional fertilizer subsidy of Rs. 14,008 Crores, Three, the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) valued at Rs 90,00 crore has been extended to seven months up to November.
Furthermore, Motilal Oswal Financial Services Ltd said the central government’s fiscal deficit could remain unchanged at Rs 15.1 lakh crore. Total spend could remain the same at Budget Estimate Level, showing a decline of 0.8% year-on-year in FY22 because of higher than targeted total spending in FY21.
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