India GDP News LIVE Updates: Economy grows 20.1% in April-June quarter helped by low base effect

Table of Contents The positive news from the output side came from agricultural and electricity, gas, water supply et. al. sectors which did relatively well as compared to even their 1Q 2019-20 levelsEconomic recovery to need both fiscal, monetary policy support: ExpertsInflation is expected to be in 5-6 per cent […]

Table of Contents

India’s Gross Domestic Product (GDP) for the April-June quarter (Q1) of the ongoing financial year 2021-22 (FY22) expanded 20.1% YoY, as per data released on Tuesday. The sharp rise in Q1 GDP data can be attributed to a low base last year. In the April-June quarter of 2020, the economy contracted 24.4% due to the Covid-19 lockdowns. The economy grew by 1.6% for Q4 of FY21 after showing contraction for the first two quarters and turning slightly positive in Q3.

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The positive news from the output side came from agricultural and electricity, gas, water supply et. al. sectors which did relatively well as compared to even their 1Q 2019-20 levels

– Dr. D.K. Srivastava, Chief Policy Advisor, EY India

Economic recovery to need both fiscal, monetary policy support: Experts

Economic recovery will continue to need both fiscal and monetary policy support, and while the global recovery may help exports, the government will have to act swiftly in correcting the protectionist stance and fast-tracking trade agreements, experts said on Tuesday.

Inflation is expected to be in 5-6 per cent range going forward

– CEA Subramanian

Non-food bank credit grows at 6.2 per cent in July

The non-food credit bank credit grew at 6.2 per cent in July 2021, compared to 6.4 per cent growth a year ago, RBI data showed. Advances to agriculture and allied activities continued to perform well, registering an accelerated growth of 12.4 per cent in the reporting month, against 5.4 per cent in July 2020, according to RBI data on Sectoral Deployment of Bank Credit – July 2021 released on Tuesday.

GDP data for first quarter 2021-22 reaffirms imminent V-shaped recovery

– Chief Economic Advisor

India Inc on GDP bounce back

Enthused by the 20.1 per cent expansion of the Indian economy in the first quarter of the ongoing fiscal year, India Inc on Tuesday said the number reflects that the economy being hit by the pandemic has bounced back.

The overall real GDP growth in 1Q of 2021-22 at 20.1% could not make up for the large contraction of (-)24.4% in the corresponding quarter of the COVID year resulting in a lower real GDP magnitude by a margin of INR3.3 lakh crore as compared to the 1Q 2019-20 level

– Dr. D.K. Srivastava, Chief Policy Advisor, EY India

Niti Aayog Vice Chairman Rajiv Kumar on GDP

India’s growth rebound in the first quarter of this fiscal will be the foundation of sustained expansion in successive quarters, Niti Aayog Vice Chairman Rajiv Kumar said on Tuesday, adding that the country’s GDP growth estimates may get revised upwards in the coming weeks.

Banking sector has now developed cushion to withstand impending bad loans, says CEA

India not to be impacted by U.S. Fed’s likely liquidity taper

India will not be impacted by the U.S. Federal Reserve’s move to tighten liquidity expected later this year, as India’s macro-economic fundamentals are strong, Chief Economic Adviser K V Subramanian said on Tuesday.

The adverse impact of COVID’s second wave has largely dragged the performance of the key service sector namely trade, transport, storage et. al. which grew by 34.3% in 1Q of 2021-22 as compared to a contraction of (-)48.1% in 1Q of 2020-21. This has resulted into a significantly lower output of this large service sector as compared to its level in 1Q of 2019-20, which is lower by (-)30.2%. In terms of nominal magnitude, this amounts to a contraction of INR2.1 lakh crore.

– Dr. D.K. Srivastava, Chief Policy Advisor, EY India

1Q 2021-22 output and GDP growth data reflect the differential impact of COVID-1 vis-à-vis. COVID-2 waves. Both affected the 1Q performance respectively in 2020-21 and 2021-22

– Dr. D.K. Srivastava, Chief Policy Advisor, EY India

Looking ahead, we believe COVID-19 is presenting itself as less of a risk to economic recovery thanks to vaccination progress and low risk perception

– Prithviraj Srinivas, Chief Economist, Axis Capital

India poised for stronger growth from structural reforms, govt capex push and rapid inoculation

– CEA Subramanian

June quarter GDP growth was more or less in line with expectations. The second COVID-19 wave had high human cost but the economic cost is minimal

– Prithviraj Srinivas, Chief Economist, Axis Capital

Support from rural, particularly agriculture, needs to be monitored given the fluctuations in monsoon rainfall and its impact on reservoir levels and crop harvest

– Sreejith Balasubramanian, Economist, IDFC AMC

Nominal GDP for the June quarter, which witnessed the second wave of COVID-19 infections, grew 31.7 %y/y while real GDP grew 20.1%. Driven by base effect, as this actually represents a higher-than-usual quarter-on-quarter fall, the reading was slightly below consensus and also reflects a high GDP deflator.

– Sreejith Balasubramanian, Economist, IDFC AMC

Estimates of expenditures in Q1

Vaccination progress will be crucial, given the possibility of a third wave of infections and the experience of countries which witnessed it

– Sreejith Balasubramanian, Economist, IDFC AMC

Agricultural output proved to be resilient, alongside better construction and manufacturing activity owing to less stringent localised restrictions versus the first COVID wave, whilst contact-intensive services lagged

– Radhika Rao, Economist, DBS Bank, Singapore

India’s GDP rose 20% in the June quarter, close to our forecast, with base effects magnifying the extent of jump in the headline, whilst the impact of the second COVID-19 wave better reflected in the sequential contraction. Numbers were also partly influenced by seasonal distortions (i.e. end FY-March quarters)

– Radhika Rao, Economist, DBS Bank, Singapore

Quarterly estimates of GVA at basic prices in Q1

Quarterly estimates of GVA at basic prices in Q1

Private final consumption expenditure grew at -12% YoY, 19% QoQ (in constant prices)

The GDP figures for the first quarter came in marginally weaker than our expectations (21.7% growth). However, economic activity has been reviving since July and has picked up momentum. As vaccination pace picks up we expect the momentum to pickup further, although remain wary on the evolution of delta variant cases.

– Upasna Bhardwaj, Senior Economist, Kotak Mahindra Bank, Mumbai

Q1 GDP growth in numbers

  • April-June Nominal GDP growth at 31.7%
  • April-June GVA expands 18.8% YoY
  • April-June construction sector growth at 68.3%
  • April-June manufacturing sector growth at 49.6%
  • April-June mining sector growth at 18.6%

India’s economy sees growth of 20.1%, totalling up to Rs 30.1 lakh crore

April-June quarter GDP expands 20.1% YoY

India’s Gross Domestic Product for the April-June quarter of the ongoing financial year 2021-22 expanded 20.1% YoY, as per data released on Tuesday. The sharp rise in Q1 GDP data can be attributed to a low base of last year.

Core sector data: Electricity generation grows by 9%

Electricity generation increased by 9% in July 2021 over July 2020, as per data released on Tuesday. Its cumulative index increased by 14.6% from April to July 2021-22 over the corresponding period of previous year.

Core sector numbers revised upwards

Index of Eight Core Industries for April 2021 is revised up to 62.6% from its provisional level 56.1%.

Core sector growth at 9.4% in July

Seven of the eight sectors have grown, except crude oil which declined. April saw a sharp rise in the core sector by 56.1 per cent YoY. In May, the core sector output saw a growth of 16.8 per cent. However, in June, the core sector output rose by 8.9 per cent.

Economic activity picking pace, further upside to growth likely: Moody’s

Moody’s Investors Service on Tuesday said the economic activity in India is picking up with the gradual easing of COVID restrictions and there could be further upside to growth as economies around the world gradually reopen.

April-July fiscal deficit nears Rs 3.21 trillion, or 21.3% of the budgeted target for the whole year

Net tax receipts were Rs 5.21 trillion while total expenditure was Rs 10.04 trillion, the data showed.

States’ fiscal health

India Ratings and Research (Ind-Ra) expects aggregate fiscal deficit of states to moderate to 4.1 per cent of the gross domestic product (GDP). The agency’s earlier forecast for FY22 was 4.3 per cent. The impact of second Covid wave on the economy notwithstanding, Ind-Ra estimates nominal GDP to grow 15.6 per cent in FY22, higher than its February estimate of 14.5 per cent in FY22.

Govt can do better than 6.8% fiscal deficit this year, says Axis Bank’s Chief Economist

“I think the 6.8% deficit target is likely to be met… The Govt could probably even better it, but I have a feeling they will not and instead choose to spend any additional revenues to support the revival process,” Axis Bank’s Chief Economist Saugata Bhattacharya told ETMarkets.

Employment situation improving

  • As per the household survey of the CMIE, the employment situation has been improving since the second week of June 2021
  • The unemployment rate improved to 9.17 per cent in June from a 12-month high of 11.9 per cent in May
Employment situation improving

India is the third largest FPI recipient

India emerged as the third largest recipient of foreign portfolio investment among major emerging market economies — after China and Brazil — as domestic equity markets witnessed record rallies in the past one year.

India is the third largest FPI recipient

Growth in FY22 to be around 11%, says CEA KV Subramanian

Notwithstanding the second wave of COVID-19, Chief Economic Adviser KV Subramanian expressed hope that economic growth during the current financial year would be around 11 per cent as projected in the latest Economic Survey.

India is the fifth largest recipient of FDI

  • As per UNCTAD’s World Investment Report 2021 (WIR), India became the fifth largest recipient of FDI inflows in the world in 2020
  • Gross FDI inflows have amounted to $32 billion in the first five months of 2021 (January to May), that is close to 37 per cent of the entire inflows in 2020
India is the fifth largest recipient of FDI

“After a run-up in the market, it should take a breather and then take cues from global markets. A consolidation is long overdue, which should happen,” Neeraj Dewan, director at Quantum Securities, said, adding that the market would be closely watching the GDP print for any deviation from expected lines.

What noted economist Ashima Goyal has to say

“Portfolio inflows into India are not only due to the quantitative easing of rich countries’ central banks, they are also attracted by India’s growth prospects. All emerging markets do not get such inflows,” the eminent economist opined. “India, moreover, has enough reserves to ride out any volatility while ensuring interest rates are aligned to the domestic policy cycle,” she said.

Indian shares scale peaks on metals boost

Indian stock indexes touched record highs in choppy trade on Tuesday, helped by metals’ stocks and telecom major Bharti Airtel, with investors awaiting economic growth data due later in the day. The blue-chip NSE Nifty 50 index was up 0.29% at 16,980.60 by 0518 GMT and the benchmark S&P BSE Sensex rose 0.30% to 57,060.50. The Nifty 50 and the Sensex are set to post their best monthly performance since December and November, respectively.

IIP and Industrial data so far

  • Industrial output has jumped 45% in the April-June period of this fiscal on a low base
  • IIP data shows that mining, manufacturing and electricity generation have expanded in double digits in the June quarter
  • Capital goods output has shown 110% growth, consumer durables 132.6% in the June quarter

What the Eco Survey says

The Survey had said growth will be supported by supply-side push from reforms and easing of regulations, push for infrastructural investments, boost to manufacturing sector through the Production-Linked Incentive (PLI) schemes, recovery of pent-up demand, increase in discretionary consumption subsequent to rollout of vaccines and pick up in credit given adequate liquidity and low interest rates.

More estimates for today’s GDP data:

  • RBI’s estimate has been revised down from its earlier projection of 26.2% in the first quarter to 21.4%.
  • Reuters conducted a poll of 40 economists estimating a 20% growth in the June quarter of 2021-22 against a contraction of 24.4% seen in the corresponding quarter of the previous year.
  • Fitch’s Indian wing- Ind-Ra (India Ratings & Research) expects the Indian economy to grow at 9.4% as high frequency indicators show ‘faster rebound than expected’.

Prominent projections for today’s GDP data:

  • The Q1 FY22 GDP could touch an unexpected high only on the back of low base effect and the reviving consumer spending.
  • RBI projects GDP to grow at 21.4%, SBI’s Ecowrap report estimated it to grow at 18.5%

The economy is going slow due to the COVID situation. Earlier the IMF had said GDP growth would be 12.5 per cent. Now it is saying it would be 9.5 per cent. I apprehend it might go down to 7 per cent. Another wave will decrease it further. If the country’s economy does not improve, the state will not be able to move forward alone

– Nobel laureate economist Abhijit Vinayak Banerjee

Indicators show revival

RTO (regional transport office) collection, electricity consumption along with mobility indicators have revived in Q2 FY22, indicating positive momentum in economic activity going forward, a report by SBI said.

After the April-June quarter of 2020, India’s economy has been reporting a robust recovery, but the second wave of the pandemic created a hurdle. India is expected to report double digit growth for Q1 FY22 after Unlock and increasing vaccination rates

India’s GDP data is set to be released at 5.30 PM. The country’s economy likely rebounded in the April-June quarter from a deep slump last year helped by improved manufacturing and despite a devastating second wave of COVID-19 cases, according to a Reuters survey of economists.

Indian shares hit all-time highs on tech boost

Indian shares hit record highs for a second straight session on Tuesday, boosted by technology stocks and telecom firm Bharti Airtel, with investors focusing on economic growth data due later in the day. The blue-chip NSE Nifty 50 index was up 0.18% at 16,960.75 by 0347 GMT and the benchmark S&P BSE Sensex rose 0.21% to 57,010.92. Both the indexes are set to post a fourth consecutive monthly gain.

Essentially we are looking at a very strong doubledigit growth of 23% for this quarter and likely higher than RBI’s own assessment. A large part of this is because of a very favourable base from last year, when the nationwide lockdown had almost brought the economy to a standstill

– Yuvika Singhal, economist at QuantEco Research

GDP growth seen at new high on recovery

The April-June GDP growth could turn out to be a record quarterly expansion as the economy recovers from the second wave of the pandemic and benefits from the low base of last year, reports TNN.

Revenue receipts expected to improve

The revenue receipts of state governments are expected to improve, backed by an economic recovery, resulting from a large section of the population receiving vaccinations, the agency said, adding that this would lead to states further easing restrictions on business and commercial activity.

Several agencies have lowered India’s projected growth rate in the current fiscal due to the impact of the second coronavirus wave. The Reserve Bank of India estimates peg growth for FY22 at 9.5 per cent. The first quarter GDP data will be released on August 31.

Despite the Covid-19 severe shock, India’s macroeconomy is more healthy and ready for faster growth than it has been for a long time. That recovery from both the first and second waves was faster than expected points towards inherent strengths of the economy

– Economist Ashima Goyal

Resilient demand keeps driving India’s growth

Factory managers in India saw a surge in activity in July, reflecting a pick up in new orders, while a similar survey of services’ purchasing managers showed the sector was inching back toward expansion. Exports, which account for nearly a fifth of the economy, have been growing for the past eight months signaling strong global demand, reports Bloomberg.

We will grow at a high growth rate this year. This year growth will be from the lower base but we anticipate 6.5-7 per cent growth next year FY’23 and from thereon, growth accelerating even further

– Chief Economic Adviser (CEA) K V Subramanian

GDP likely to grow at 18.5%: SBI report

India’s gross domestic product (GDP) is expected to grow at around 18.5% in the first quarter of the current financial year, SBI noted in its research report Ecowrap, lower than the RBI’s 21.4% projection.

“Based on our ‘Nowcasting’ model, the forecasted GDP growth for Q1 FY22 would be around 18.5% (with upward bias),” the report said. Higher growth in the second quarter of 2022, or Q1 FY22 is mainly on account of a low base.

Biz activity continues to rise: Report

Business resumption activity continued its northward journey and reached a new high, much above the pre-pandemic levels for the week ended August 29, a Japanese brokerage said on Monday. The Nomura India Business Resumption Index rose to 102.7 for the week ending 29 August from 101.3 in the prior week, as per the brokerage.

Ind-Ra lowers estimate

The aggregate fiscal deficit of Indian states is expected to moderate to 4.1% of the gross domestic product (GDP) in this financial year, India Ratings and Research (Ind-Ra) said, lowering its forecast from the previous estimate of 4.3%.

Marilynn Veness

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