New Delhi, Aug 31 (Mayank Nigam) Riding on the low base, India’s April-June quarter (Q1FY22) GDP growth surged 20.1 per cent reflecting fast-paced economic recovery. “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 contraction of 24.4 percent in Q1 2020-21,” according to National Statistical Office (NSO). GDP is the sum total of all the goods and services produced within the geographical boundary of the country.
Since GDP data comes with significant time lag it is revised during the course of the year. Quarterly gross value added (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 percent. As nationwide lockdown imposed on March 25, 2020 had crippled the economic activities in the Q1 of FY21, the GDP growth had shrunk 24.4 per cent recording the steepest decline in decades. The second wave of the pandemic during the April-June quarter of 2021 also saw business disruptions but the damage to the economy was not as severe as in the first wave. Wiser from its earlier experience, the government this time avoided countrywide lockdown and instead went for localised restrictions. India’s GDP had posted 1.6 per cent growth in the previous quarter (January-March) before the second wave of pandemic hit the country.
The high double-digit growth in the first quarter of the current fiscal is on expected lines. While the Reserve Bank of India (RBI) had projected the April-June quarter GDP growth at 21.4 per cent, SBI Research last week estimated 18.5 per cent growth in Q1 GDP primarily on account of lower base. The record Q1 growth was driven by sectors such as agriculture, manufacturing, construction and power. The quarterly estimates released by the NSO on Tuesday showed agriculture output grew at 4.5 per cent year-on-year in the April-June quarter. The mining sector grew by 18.6 per cent in the first quarter as compared to 5.7 per cent in the previous quarter. Manufacturing sector recorded 49.6 per cent growth year-on-year during the Q1 of the current fiscal. Construction sector grew by 68.3 per cent during the first quarter.
“Manufacturing and construction were the key drivers of the pickup in GVA growth in Q1 FY2022, whereas on the expenditure side, private consumption and investment powered the YoY turnaround in the GDP performance. Nevertheless, all of these sectors remained well below their pre-covid levels in Q1 FY2022. On a sobering note, only agriculture and electricity posted a higher GVA in real terms relative to their pre-covid performance,” said Aditi Nayar, Chief Economist, ICRA. While government consumption expenditure recorded a YoY contraction in Q1 FY2022, emerging as a drag on the pace of growth, it exceeded the pre-Covid level. “We had estimated Q1 GDP to grow at 21.7 per cent largely because of base effect and also some positivity in sectors such as manufacturing and construction. Economic activities this time were not as impacted as they were during the first wave last year,” said Suvodeep Rakshit, Senior Economist, Kotak Institutional Equities. “We see the whole year GDP at 9 per cent. The second half will not be as high as the first half but that is more of a base adjustment and comparatively the first quarter being very high. Now on, from an economic activities perspective, things would keep improving. Closer to the second half and more towards festive months you would see the services sector also picking up as the vaccinated population increases, “he added.