Domestic economic activity so far remains unaffected by Omicron concerns. True enough, COVID infections still remain low in India and continue to trend lower on a 7DMA basis. In contrast, globally Omicron is becoming the dominant strain (replacing Delta virus) in several countries leading to renewed restrictions and lockdowns. Our DART index validates domestic economic recovery continuing into Dec-21 with the index rising to a record high and 1.4% up on MoM basis. The incremental improvement has been led by Electricity generation, Traffic congestion along with Mobility especially to Workplaces. Encouragingly vaccinations too continue to clock a daily pace of over 7.1 mn in Dec-21 compared to 5.8 mn over Oct-Nov-21.
Heading into Q4 FY22, uncertainty with respect to spread, severity and immunity evasion of Omicron in India remains. Globally, widening travel restrictions and lockdowns are likely to weigh on trade, growth with possible repercussions on inflation. India does remain vulnerable to the new variant with only 40.0% of population being fully vaccinated till date. Given the exceptionally favourable statistical base along with support from fiscal and monetary policy, we continue to hold our FY22 GDP growth estimate of 10% with mild downside risks, although sequential slowdown in Q4 GDP looks inevitable amidst elevated input costs, lingering supply disruptions and Omicron risks.
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