Mumbai:
Nomura said on Friday that GDP data indicated an improvement in domestic demand in the June quarter, but growth was much slower in regions hardest hit by the pandemic, indicating deeper scars and lower trend growth. was.
Based on GDP and high frequency data, the pace of domestic demand improved sequentially in the April-June period, but slowed recovery in the pandemic-affected areas, easing in the post-pandemic trend, Sonal Verma, Chief The Economist (India and East Asia) suggests. -Japan) in Nomura, said in a note.
“Despite the reopening of the contact intensive service areas, the tremendous performance of the most vulnerable sectors suggests a potentially deep scar,” Verma said.
He said three sectors – manufacturing, construction and trade, and hotels, transport and communication – showed disappointing GDP momentum in the June quarter.
He said that apart from agriculture, these three sectors give more employment to workers in the unorganized sector.
“Despite their slow rebound, reopening, firms have either closed down or are no longer contributing to production, while larger firms have grown and gained market share.”
In light of the above and ensuing cyclical growth as spillover effects from weak global growth momentum, and sluggish demand, Nomura expects India’s GDP growth to slow to 7.0% year-on-year in the current fiscal. 5.2% in the 2023-24 financial year.