In light of a stronger-than-expected economic recovery from India's lockdown of 2020 and the second wave of the COVID-19 pandemic in mid-2021, Moody's Investors Service has raised its GDP growth forecast for India for 2022, from 7 percent to 9 percent.

According to Moody’s research as part of its update to its Global MAcro Outlook 2022-2023 report, sales tax collection, retail activity and PMIs (Purchasing Managers Indices) during the calendar year suggested solid momentum. 

However, the report also suggested that high oil prices and supply distortions remain an issue for the south asian country.

"As is the case in many other countries, the recovery is lagging in contact-intensive services sectors, but it should pick up as the Omicron wave subsides. With most remaining restrictions now being lifted with the improvement in the COVID situation, including the reopening of schools and colleges for in-person instruction across various states, the country is on its way to normalcy," Moody's added.

Even with the changes in the 2022’s numbers, the  GDP growth forecast for 2023 has been retained at 5.5 percent.

The year 2022 forecasts translate into a projection of 8.4 percent growth for FY23 and 6.5 percent for FY24. The FY23 projection is 60 basis points higher than the Reserve Bank of India's (RBI) forecast of 7.8 percent.

However, the central government's Economic Survey for 2021-22 estimated a real GDP growth rate of 8-8.5 percent for the next financial year, with the 2022 Budget assuming a nominal GDP growth rate of 11.1 percent.

It also added that the 2022 Budget prioritised growth, while the RBI's monetary policy remained supportive.