India's GDP to grow by 8.3% in Q2 FY22, 9.4% in FY22: Ind-Ra

The baseline is the median value for the corresponding day of the week, i.e., during the five-week period January 3 to February 6, 2020 and was 16 per cent YoY lower than the baseline at FYE21. Mobility started improving in Q2 FY22 and was only 7 per cent YoY lower than the baseline at the end of Q2 FY22, Ind-Ra said in a media release.

The improvement in the workplace mobility became possible due to the extensive vaccination programme of the government. Cumulative vaccinations leapfrogged to 890.21 million at the end of Q2 FY22 from 335.72 million at the end of Q1 FY22 (FYE21: 65.12 million).

Consecutive nine quarters of over 3 per cent agriculture gross value-added growth has brightened consumer spending. Therefore, Ind-Ra expects private final consumption expenditure to grow close to 10 per cent in Q2 FY22. Even investment activities have found support from the government’s focus on infrastructure.

Ind-Ra expects the fixed capital formation to grow at around 8.5 per cent in Q2 FY22. The union government’s capex grew 51.9 per cent in Q2 FY22 (Q1 FY22: 26.3 per cent) and aggregate capex of 24 state governments grew 62.2 per cent in Q2 FY22 (Q1 FY22: 98.4 per cent). However, private capex revival is still slow and limited to select sectors.

Ind-Ra, however, believes these growth numbers should be interpreted with caution. Since H1 FY22 growth was mainly due to the lower base of H1 FY21, economic growth is expected to revert closer to the medium/long trend growth H2 FY22 onwards. However, recent reforms measures such as Production-linked Incentive scheme in combination with sustained exports growth may provide a fillip to the ongoing growth recovery.

ALCHEMPro News Desk (KD)