New Delhi, Feb 17 (IANS): India's FY22 GDP growth is expected at 9.5 per cent with downside risks, said Acuite Ratings & Research on Thursday.

The ratings agency cited that adverse impact of elevated commodity prices and the potential financial market volatility on account of monetary policy normalisation as some of the downside risks.

"Expectedly, Omicron has led to a fresh dent in domestic economic activities which was also reflected in our proprietary AMEP (Acuite Macroeconomic Performance) monthly index which eased to 112.2 in Jan-22 from 115.0 in Dec-21," Chief Analytical Officer, Suman Chowdhury, said.

"From growth perspective, the index contracted sequentially by 2.5 per cent MoM in Jan-22 from an expansion of 3.3 per cent in Dec' 21."

However, the agency said that magnitude of the adverse impact has been much lower as compared to the previous pandemic waves given less severity of infections amidst robust vaccination coverage.

"Given the limited impact of the third Covid wave, we continue to expect FY22 GDP growth at 9.5 per cent albeit with some downside risks from adverse impact of elevated commodity prices and the potential financial market volatility on account of monetary policy normalisation by key global central banks," Chowdhury said.

"For FY23, we expect GDP growth at 7.5 per cent amidst government's strong thrust on infrastructure segment underscored in the Union Budget FY23, healthy progress on vaccination, moderate recovery in rural consumption and the full play out of pent-up demand."