India’s economic recovery gains further traction bolstered by the abating COVID wave and the pickup in the vaccination drive. High-frequency indicators in Q2 FY22 point towards a return to their respective pre-COVID levels. Aided by a robust export performance, and higher government spending anticipated in the remainder of the year, we revise our real GDP growth forecast higher to 10.5% YoY for FY22 from 9.9% YoY previously. The policy environment remains supportive. We expect a change in RBI’s accommodative stance in the Dec’21/Feb’22 meeting, but measures to address the surge in liquidity are expected before that.
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