Assocham predicts double digit FY22 GDP growth

High freight rates continue to hurt exports

Assocham, one of India’s top three industry associations, has predicted double digit GDP growth for India this year, citing encouraging response from its members.

The association, which counts hundreds of manufacturing and service sector companies as its members, said the economy is fast returning to normal after the disruption seen in April and May due to the second wave of COVID-19 in India.

“Ahead of the festive season, there are signs of improved consumer confidence in several key sectors of the economy, including contact services like hospitality while activities in construction and renovation have been on a pick-up for the past few months leading to return of migrant workers for gainful deployment,” it said in a statement.

India had seen a sharp fall of 7.3% in the year ended March 2021. A double digit growth for the economy this year would mean a growth of at least 3% for India’s GDP over FY19 — the year before COVID-19 first struck India.

Assocham said improvements are being reported from all sectors, including the most drastically impacted ones such as tourism and retail.

“Our feedback from our member companies, including those in the SMEs points towards steady pick-up in economic activities with notable gains visible in retail trading, malls, food business and inter-state travel,” it said.

It pointed out that most states allow the entry of fully vaccinated people without RT-PCR tests, and this has led to a pick up of inter-state travel, and tourists have started flowing to key attractions in states like Himachal Pradesh, Uttarakhand, Rajasthan and Goa.

“Hopefully, the Covid situation would remain under control with a sharp rise in daily vaccination, leading to further pick up in tourist activities in states like Rajasthan and Goa. After a washout of the winter tourist season in Rajasthan and Goa, we expect the ensuing winter to turn for better,” it said.

The association said that feedback from exporters also show “a positive outlook” for the current financial year.

“Exports to Europe, the US and several Asian destinations would definitely look up. Prospects for exports of metal and other engineering goods, textiles, chemicals and agri products appear bright. While there is a good demand in the developed nations, the issue of concern relates to increasing cost of cargo movement by ship liners. Hopefully, this should play out as the supply bottlenecks are eased,” it added.

ASSOCHAM Secretary General, Deepak Sood, said consumer demand is visible and turning into business volumes. “This would be reflected in the second quarter results of corporate India. We should see definite improvement in industries like paints, consumer durables, passenger vehicles and engineering goods.”

At the same time, he urged everyone to continue to observe safeguards such as masking and social distancing.

“Covid Appropriate Behaviour (CAB) would remain one of the most important weapons to defeat the pandemic. We in ASSOCHAM have been consistently reaching out to our members for maintaining a constant vigil on their workplace with CAB,” he said.