Indian economic growth increased by 20.1 percent in the first quarter of this financial year, touching a record high as it contracted by 24.4 percent the same quarter last year. With the catastrophic two waves of the covid pandemic, consumer spending finally rose and the manufacturing industry also saw an improvement, as per the data released by the government on Tuesday.
The Ministry of Statistics & Programme Implementation issued a statement, “GDP at Constant (2011-12) Prices in Q1 of 2021-22 is estimated at Rs 32.38 lakh crore, as against Rs 26.95 lakh crore in Q1 of 2020-21, showing a growth of 20.1 percent as compared to the contraction of 24.4% in Q1 2020-21.
Quarterly GVA at Basic Price at Constant (2011-12) Prices for Q1 of 2021-22 is estimated at Rs 30.48 lakh crore, as against Rs 25.66 lakh crore in Q1 of 2020-21, showing a growth of 18.8%.”
While the public spending was cut down by 4.78 percent, the Gross Value Added (GVA) growth was contributed by the mining and quarrying, manufacturing, and construction sectors. The data also showed investment and private consumption also soared, influencing the growth, and adding 56.6 percent and 19.34 percent respectively.
Although the numbers show an optimistic view, the experts, however, are warning that this might not be the actual picture. “The more heartening numbers came from the industrial sector which grew by 46.1 percent in 1QFY22. Even its various segments witnessed robust growth in 1QFY22.
Manufacturing, mining, electricity/utility services, and construction grew at 49.6percent, 18.6percent, 14.3percent, and 68.3 percent respectively in 1QFY22,” Sunil Kumar Sinha, Principal Economist at India Ratings said.
The economist also said that the growth digits are influenced by the base effect and the manufacturing industry’s output in the first quarter is lower than the industry output in the same quarter fiscal year 2020.
Whereas, some economists like Rahul Bajoria of Barclays Securities Pvt. Ltd. (India), are positive as the growth has been despite the domestic lockdowns across states.
“For the full year FY 21-22, we revise up our GDP forecast, and now expect the economy to grow by 10.2% in FY 21-22, modestly higher than the RBI’s 9.5% projection and our previous forecast of 9.2%,” said Bajoria. The July and August data shows that the rate of recovery for the economy is gradually increasing across metrics.
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