GDP figures for the second quarter will be released today
The GDP figures for the second quarter will be released today. Leading rating agency India Ratings said the economy will grow 8.3 per cent in Q2 and close the year at 9.4 per cent in FY22, which is 10 bps lower than the consensus forecast.
The agency has attributed higher growth to agriculture growth of over 3 per cent for nine consecutive quarters, driven by increased consumer spending and the resultant growth in private final consumption expenditure, which is expected to decline to around 10 per cent in the September quarter. Chances are. current financial year.
Another key reason is the nearly three-fold jump in vaccinations, which rose to 890.21 million at the end of October, from 335.72 million at the end of June.
Given that Q1 was impacted by a second wave, which reduced workplace mobility and in turn led to economic activity, which was 26 percent below the baseline at the end of Q1 and 16 percent below the baseline in FY2011, It said mobility began to improve. So far in Q2 it was only 7 per cent annualized lower than the baseline at FY22-end Q2.
Workplace mobility improved after vaccination accelerated. Cumulative vaccinations increased to 890.21 million at end-Q2 from 335.72 million at end-Q1.
Even investment activities have been supported by the government’s focus on infrastructure and the agency expects fixed capital formation to grow at around 8.5 per cent in the second quarter.
Government capital expenditure grew by 51.9 per cent in Q2 as against 26.3 per cent in the corresponding previous quarter of the current fiscal and total capital expenditure of 24 states grew by 62.2 per cent in Q2 as against 98.4 per cent in Q1. Yet the revival of private capital expenditure is still slow and confined to select sectors.
As H1 growth is primarily driven by a lower base, economic growth is expected to return to near medium/long trend growth from the second half. However, recent reforms such as a production-linked stimulus scheme and sustained export growth could provide impetus to the ongoing growth recovery, the report concludes.
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