New restrictions in India due to rising Covid-19 cases could lower the nation’s economic growth by about a quarter of a percentage point in the current fiscal year, according to HSBC Holdings Plc.

“Economic cost will be there, but hopefully it will just be about a third or lower than the economic cost of previous waves,” HSBC economist Pranjul Bhandari said Friday in an interview with Haslinda Amin and Rishaad Salamat on Bloomberg TV. “For the full year ending March 2022, GDP growth could be 25 basis points lower than we had earlier estimated.”

India is due to release its first official estimate for annual GDP later Friday, which a Bloomberg survey of economists is forecast to show an expansion of 9.3%. That’s slower than the 9.5% growth projected by the Reserve Bank of India, as well as the International Monetary Fund.

Bhandari said the rapid rise in virus cases could defer RBI rate hikes for a while, but eventually the central bank would need to act due to rising price pressures.

Data next week is likely to show consumer price gains hit 5.8% last month, inching closer to the ceiling of the RBI’s 4-6% target range, while wholesale inflation stayed elevated in double digits.

“That’s something the RBI can’t ignore over the next couple of months and yet it can’t press on with monetary policy normalization very rapidly,” she said. “We believe RBI’s normalization is going to be a little softer, perhaps delayed by a meeting or two.”

The RBI is scheduled to conclude its next meeting on Feb. 9.