The country’s GDP in the first quarter of FY22 could be at a record high- thanks to the low base last year and consumer spending that is back to normal after hitting nadir during the two subsequent waves of COVID-19 infections. But this strong recovery riding on the back of low base effect does not indicate a strong recovery. Recently, the State Bank of India (SBI) had pegged India’s GDP to grow at 18.5 per cent in the June quarter on low base effect. “Based on SBI Nowcasting model, the forecasted GDP growth for Q1 FY22 would be around 18.5 per cent (with upward bias). The GVA is estimated at 15 per cent,” the ecowrap report said.
Meanwhile, the Reserve Bank of India (RBI) has predicted the GDP in the first quarter to grow at 18.5 per cent from earlier projected growth rate of 26.2 per cent. In June this year, the apex bank slashed the GDP growth forecast for 2021-2022 from 10.5 per cent to 9.5 per cent. During and after the ferocious COVID-19 wave, localised lockdown worsened the situation and posed a formidable challenge in front of the economy to rebound.
Recently, India Ratings & Research (Ind-Ra), Indian arm of global rating agency FITCH, revised India’s growth forecast to 9.4 per cent for the current fiscal year 2021-22. In June, it estimated Indian economy to grow between 9.1 and 9.6 per cent. “Ind-Ra has revised its GDP growth for FY22 to 9.4 per cent year-on-year because with the ebbing of COVID 2.0, several high frequency indicators are showing a faster rebound than expected, kharif sowing is indicating a significant pick-up with the revival of south-west monsoon and exports volume and growth showed a surprise turnaround in 1QFY22,” the agency said.
A recent poll of 41 economists conducted by news agency Reuters indicated that the gross domestic product (GDP) rose 20 per cent in the June quarter, compared to the record contraction of 24.4 per cent in the same period a year ago. A few days ago, ratings agency Icra said India’s GDP is expected to grow at the “deceptively high” level of 20 per cent for the April-June quarter, but it would still remain far below the pre-Covid level
The International Monetary Fund (IMF) also cut its economic growth forecast for India to 9.5 per cent for the fiscal year to March 31, 2022 as the second COVID-19 impacted the pace of recovery. On the other hand, US-based rating agency Moody’s has projected India witnessing 9.3 per cent growth in the current fiscal ending March 2022. For 2021 calendar year, Moody’s has cut the growth estimate sharply to 9.3 per cent.
“As a result of the negative impact of the second wave, we have revised our real, inflation-adjusted GDP growth forecast down to 9.3 per cent from 13.7 per cent for fiscal 2021 (FY22),” the Moody’s said.
India’s GDP was up 1.6 per cent in Jan-March quarter of FY21 as the economy, after passing the first peak of COVID-19 wave clawed back to normalcy. However, in Q3 of FY21 India’s GDP growth rate was 0.4 per cent.
India’s economy had sharply contracted by a record 23.9 per cent in the first quarter of 2020-21 due to the nationwide lockdown that brought the Indian economy to a screeching halt. The business activity index based on ultrahigh-frequency indicators show a further increase in August 2021, with the latest reading for the week ended August 16, 2021, at 103.3. The GDP number for the first quarter of 2021-2022 is scheduled to be released on August 31.
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