HSBC Survey Reveals Covid Surge Slowing India's Growth: Report

India’s annual GDP forecast could be around 9.3 per cent which is lower than the 9.5 per cent growth projected by the RBI and IMF, according to HSBC report

The rapid rise in Covid cases could defer RBI rate hikes for a while, but eventually the central bank would need to act due to rising price pressures, the report said. Image: Getty

New Delhi: Fresh curbs due to surging Covid-19 cases in India could dampen the economic growth of the country by about a quarter of a percentage point in the current fiscal year, according to HSBC Holdings Plc.

HSBC Holdings quoted saying, “Economic cost will be there, but hopefully it will just be about a third or lower than the economic cost of previous waves,” HSBC economist Pranjul Bhandari said Friday in an interview on Bloomberg TV. “For the full year ending March 2022, GDP growth could be 25 basis points lower than we had earlier estimated.

According to a Bloomberg survey of economists, India’s annual GDP forecast could be around 9.3 per cent which is lower than the 9.5 per cent growth projected by the Reserve Bank of India (RBI), as well as the International Monetary Fund (IMF).  

India is due to release its first official estimate for annual GDP on Friday. The GDP figures will come three weeks before Finance Minister Nirmala Sitharaman presents the Union Budget.

The rapid rise in Covid cases could defer RBI rate hikes for a while, but eventually the central bank would need to act due to rising price pressures, said Bhandari.

Data next week is likely to show consumer price gains hit 5.8 per cent last month, inching closer to the ceiling of the RBI’s 4-6 per cent target range, while wholesale inflation stayed elevated in double digits.

“That’s something the RBI can’t ignore over the next couple of months and yet it can’t press on with monetary policy normalisation very rapidly,” she said. “We believe RBI’s normalisation is going to be a little softer, perhaps delayed by a meeting or two," according to the Bloomberg report.

The RBI is scheduled to conclude its next meeting on February 9.