Business & Investment

Moderate recovery: India’s GDP grows at 8.4% in the second quarter

Nominal GDP in the second quarter increased by 17.5% year-on-year to Rs 555,400

According to data released by the National Bureau of Statistics (NSO), India’s gross domestic product (GDP) came from a strong base (-7.4%) with moderately rising value added between sectors in September. It expanded by 8.4% year-on-year in the quarter. ) on Tuesday. Unless the new coronavirus mutant Omicron causes havoc, the economy may continue on a recovery path until the second half of the year, and GDP may reach pre-pandemic (FY20) levels in the current fiscal year itself.

Persistently rising levels of “core” inflation remain a threat to the recovery process. Companies facing margin pressure may increasingly pass on increased input costs to consumers in the coming quarters.but RBI Given the potential for rising inflationary pressures, monetary tightening may need to begin by early next year, as policy rates are likely to remain unchanged in next week’s bimonthly review. Nonetheless, nominal and real GDP remained 12.4% and 0.3% higher in the second quarter of 2010 than in the same period of 2008 (pre-pandemic levels), respectively.

However, in the second quarter of 2010, consumer spending, a key component of the economy, fell 3.5% below the level of the second quarter of 2008, and fixed investment returned to pre-Covid levels, which was a disastrous period. .. The revival of private capital investment is slow and limited to specific sectors.

Government economic support through consumption and investment has helped recover from the valley caused by the pandemic, but adjustments to such support are evidence — in the second quarter, government final spending on GDP. Percentage decreased by about 3 percentage points. June quarterly level. Government final consumer spending remained 16.8% lower in the September quarter than before the pandemic (the same quarter of 2008).

High frequency indicators from the second quarter onwards have generally been promising. The infrastructure industry (core sector) increased 7.5% year-on-year in October as production in all sectors except crude oil exceeded year-on-year, according to official data released separately on Tuesday. Refined petroleum products and coal have not yet been restored to pre-Covid levels.

Another aspect that is a good sign for the economy is that government revenues, especially tax revenues, are very strong. Therefore, we are in a position to continue to support the economic recovery this year and achieve economic growth of 9 to 9.5% in 2010, which is the fastest growth among the major powers. Doing so may not even cause a budget deficit far higher than the budget’s expected GDP of 6.8%. This seems to be true even if there are two major investment reduction plans — BPCL And LIC—The year is not important.

Chief Economic Advisor Krishnamurti V. Sabramanian argued that the recovery remained strong until the second quarter and that the positive “basic effect did not reduce the attention of the recovery.” He is confident that real GDP will grow by double digits in 2010, 6.5-7% in the next fiscal year, and more than 7% thereafter.

Nominal GDP for the second quarter was Rs 55.54, up 17.5% year-on-year.

The revival of industry in developed countries has boosted India’s commodity exports, despite bottlenecks such as global container shortages and exorbitant shipping costs that weighed on exporters’ supply capacity somewhat. Exports as a share of GDP rose to 23.3% in the second quarter of 2010, on a real basis, from 23.7% in the previous quarter and 21.1% in the previous year. However, the negative impact of net exports in the second quarter was greater than in the previous year, as imports surged as domestic demand recovered.

Gross value added growth in major sectors in the second quarter of 2010 was 5.5% for manufacturing, 7.5% for construction, 8.2% for “trade hotels, transportation and telecommunications services”, and “financial, real estate and professional services”. : It was 7.8. % And “administration, defense, etc.”: 8.5%.

Farms and related sectors grew 4.5% in the second quarter. This is an excellent performance by that standard, suggesting that it remains largely isolated from Covid’s onslaught compared to 3% in the previous year. Despite the light rains in August, good distribution in key areas boosted the outlook for Harif crops.

Icra’s chief economist, Aditi Nayar, said lower-than-expected growth in manufacturing, construction, trade, hotels, etc. suggests that rising input costs are eating up corporate profits. .. However, despite the renewed uncertainty following the discovery of the Omicron Covid variant, second-quarter growth exceeded the Monetary Policy Committee’s forecast of 7.9%, “December 2021 Policy Review. It is expected that the status quo will be maintained, “says Nayar. “But the tone may change to show that the February 2022 policy review will change the monetary policy stance to neutral.”

Crisil’s chief economist, Dharmakirti Joshi, said investment (mainly government) remains a major growth driver, while consumer spending has yet to show a decisive recovery. “Also, unlike last year, net exports are once again a drag on the economy,” he added.

M Govinda Rao, Chief Economic Advisor at Brickwork Ratings, said the recovery is gaining momentum and is expected to grow by 10-10.05% across 2010.

Moderate recovery: India’s GDP grows at 8.4% in the second quarter Moderate recovery: India’s GDP grows at 8.4% in the second quarter

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