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India’s gross domestic products (GDP) growth is projected to reach the ‘deceptively high’ level of 20 per cent for the April-June 2021 quarter, but is far below the same in pre-COVID times, according to rating agency ICRA, which recently said the low base of last year, when GDP had contracted by close to 24 per cent, ‘conceals’ the impact of the COVID-19 second wave.
Economic activity is boosted by robust government capital expenditure, merchandise exports and demand from the farm sector, ICRA said, estimating the GDP to grow by 20 per cent.
The gross value added (GVA) will register a growth of 17 per cent for the June quarter and is estimated to contract by 15 per cent compared to the preceding March quarter, which shows the impact of the second wave, it said.
"The double-digit expansion expected in YoY [year on year] terms in Q1 FY22 is deceptively high, as it benefits inordinately from last year's contracted base. We forecast GVA and the GDP to have shrunk by around 9 per cent each in Q1 FY22, relative to the pre-COVID level of Q1 FY20, highlighting the tangible distress being experienced by economic agents in the less formal and contact-intensive sectors," its chief economist Aditi Nayar said in a press release.
The Reserve Bank of India expects the GDP to expand by 21.4 per cent in the quarter as per its revised estimates released earlier this month. The official data on economic activity from the central statistics office is expected by end of the month.
Nayar said based on its assessment of volumes and available earnings, it is forecasting a GVA expansion in industry at a considerable 37.5 per cent, led by construction and manufacturing, which experienced significantly less curbs in the just-concluded quarter compared to the situation during last year's stringent nationwide lockdown.
Construction activity benefitted from the healthy central and the state government capital expenditure spending in Q1 FY 2022, which exceeded even the pre-COVID levels of Q1 FY20, she said.
GVA growth in agriculture, forestry and fishing is likely to print at 3.0 per cent, benefitting from the healthy Rabi harvest, ICRA said.
"Despite the higher incidence of Covid-19 cases in rural India in the second wave, healthy crop output and procurement, as well as higher minimum support prices appear to have buffered the farm sector's demand during this challenging period," Nayar said.
The rating agency cautioned that the organised sector is expected to have gained at the cost of the less formal space during this period. The available statistics are often unable to capture the pain experienced by the latter, which may result in an overestimation of growth under the present circumstances, it added.
Fibre2Fashion News Desk (DS)
India's GDP growth is projected to reach the 'deceptively high' level of 20 per cent for the April-June 2021 quarter, but is far below the same in pre-COVID times, according to rating agency ICRA, which recently said the low base of last year, when GDP had contracted by close to 24 per cent, 'conceals' the impact of the COVID-19 second wave.