Indian Economy News

India's real GDP growth in the first quarter of 14.2-23.3%

According to an ET survey of analysts, the Indian economy is expected to increase 19-20% in the first quarter of current fiscal year, aided by a large base effect from a year ago, when it dropped by over a quarter, matching to the impacts of the second Covid wave.

For the first quarter, the median projection was 19.5%, with a range of 14.2-23.3%. The entire year's gross domestic product (GDP) is anticipated to increase by 7.9-9.6%.

In the first quarter, the Reserve Bank of India (RBI) forecasts 21.4% GDP growth and 9.5% fiscal policy growth. In the preceding quarter, India's GDP increased by 1.6%, but in FY21, it increased by a record 7.3%.

Despite the fact that year-on-year growth stepped up in the first quarter and was still totally poor, experts predict that GDP will decline by approximately 5% from the previous quarter.

According to economists, the release of GDP statistics on August 31 will show the magnitude of the second wave's impact. ET polled 11 economists to find out what they think the future holds.

According to HDFC Bank economist Ms. Sakshi Gupta, activity is projected to have decreased sequentially in Q1 as a result of the second wave, while the low base impact is expected to boost growth in the quarter.

Since June, when the lockdown limitations were relaxed, high-frequency indicators have improved. Economic activity was not as adversely affected as last year due to the limited nature of the limitations during the second wave, they added. In July, India's goods exports hit a new high of US$ 35.43 billion, up over 50% year on year.

In July, GST collection increased to almost Rs. 1 lakh crore (US$ 13.46 billion), PMI manufacturing increased, and electricity usage, car registrations, and e-way bills all increased.

“Because the business functioned throughout the second wave, bounce back is more evident in the industry than contact-intensive services,” said Mr. Sunil Kumar Sinha, chief economist, India Ratings and Research.

Depending on the country's adult population being completely vaccinated by the end of December, the agency forecasts real GDP growth of 15.3% for the quarter and 9.6% for the year. If that does not happen, GDP would increase by 9.1% in FY22, he said.

“A complete rebound in consumption is also expected to take longer, given tight balances heading into the pandemic and continued scarring of the labour market under Covid, which would impact trend growth after the first boost from blocked demand,” said Ms. Radhika Rao, an economist at DBS Group Research.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.