By Manoj Kumar

NEW DELHI, (Reuters) – Data is expected to indicate that India’s economy recovered in the July-September quarter. This was due to a rebound in consumer spending. However, fears about the future were raised by the Omicron coronavirus variant.

Asia’s third-largest economic sector has seen a recovery from the deep recession of last year. It was helped by rising vaccination rates as well as a rise in government spending.

A Reuters poll of 44 economists predicted that the GDP data – which will come out Tuesday at 1200 GMT – would show an 8.4% increase year-on-year in the September quarter. That is compared to a 7.5% contraction last year.

As the market waited for the data, the health authorities announced they would be tightening airport testing in response to the Omicron variant’s spread. On Saturday, Prime Minister Narendra Modi ordered that plans for easing travel restrictions be reviewed.

Exports, electricity generation, bank deposits, and railway freight all showed improvement signs in October. Vehicle sales, fuel sales, tax collection, however, showed slower growth.

Private economists claim that the economy is in recovery mode thanks to strong farm sector growth. However, risks include slowing global growth, increasing manufacturing prices, and new COVID-19 variations.

Shubhada Rao (economist at QuantEco Research in Mumbai) stated that COVID risk has resurfaced worldwide and (these should be monitored) for implications regarding the timing of normalization.

Many expect the Reserve Bank of India to take liquidity out before normalizing rates, despite growing inflationary concerns.

The RBI forecasts an annual growth rate of 9.5% for the current fiscal year.