India’s GDP growth in the April-June 2021 quarter is estimated to be “deceptively high” at 20 per cent, ratings agency ICRA has said. This is, however, far below the numbers clocked during the pre-Covid period, it clarified.
The low base established last year after the GDP contracted 24 per cent “conceals” the impact caused by the second wave of the pandemic, the agency clarified.
Government capex, merchandise exports and demand from the agri sector tend to boost economic activity, ICRA observed. Assuming a GDP growth of 20 per cent and the gross value added (GVA) grows 17 per cent in the said quarter, the GVA contraction shall stand close to 15 per cent when compared the March quarter, an aftereffect of the second wave, the agency said,
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The expected double-digit expansion Y-o-Y in the first quarter of FY22 is deceptively high, as it benefits from last year’s contracted base, said Aditi Nayar, the chief economist of ICRA. According to him, both, the GVA and GDP shrunk by around 9 per cent each in Q1FY22, when compared with the pre-Covid level of Q1FY20, which highlights the distress economic agents in the less formal and contact-intensive sectors are experiencing.
As per the revised estimates published by the Reserve Bank of India (RBI) earlier this month, the GDP is likely to expand 21.4 per cent in the same quarter.
The GVA growth clocked in agriculture, forestry and fishing is likely to touch 3 per cent, owing to a healthy Rabi harvest, ICRA claims.
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It is very likely that the gains clocked by the organised sector in this period were at the cost of the less formal space, the rating agency has cautioned.
