The festive season accompanied by traction in vaccination are likely to be two critical factors supporting a revival in private consumption sentiment and demand in Q3 FY22. As per our estimates, if Sep-21’s vaccination pace of ~7.8 mn doses/day is sustained, India could inoculate ~100% of its adult population partially by the end of 2021 and perhaps fully by Feb-22. This is expected to galvanize a faster recovery in contact-intensive services in H2 FY22. From manufacturing sector’s perspective, we remain watchful of the brewing concerns from the global energy crisis and its impact on domestic coal shortages, possible albeit minor spillovers from China’s credit market and the deceleration in domestic auto production amidst semi-conductor shortages.
For now, the normal rainfall for the just concluded Southwest monsoon season, anticipation of a record high Kharif output (as per the first advance estimates), continued strength in exports amidst global growth recovery and a broadly accommodative monetary and fiscal policy, reinforce our FY22 growth estimate of 10% with mild downside risks.
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