With the recent rise in Omicron cases in India (though still miniscule), few states have swung into action with announcement of light containment measures of night curfews and restrictions on gatherings. The experience of other countries that have witnessed a fast transmission of Omicron variant, with efficacy of vaccines and booster shots still under deliberation may have prompted this pre-emptive response.

While we do remain cautious of a third wave in India, we believe its economic impact could potentially be short-lived and restrained. Given the uncertainty with respect to peaking of cases, we continue to hold our FY22 GDP growth estimate of 10% with mild downside risks. For FY23, we are estimating a growth of 7.5% driven by a combination of continued rollover in pent-up demand along with an uneven pick up in private capex in select sectors in H2.

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