The State Bank of India (SBI) recently forecast a gross domestic product (GDP) growth of around 18.5 per cent for the country in the first quarter (Q1) of this fiscal (FY22). The gross value added (GVA) is estimated at 15 per cent. It also foresees the possibility of a wide divergence between GVA and GDP because of strong tax collections. A substantial recovery is visible in corporate GVA as well, it said.
Overall, the corporate GVA of 4,069 companies registered a growth of 28.4 per cent in Q1 FY22. Higher growth in Q1 FY22 is mainly on account of low base.The State Bank of India has forecast a GDP growth of around 18.5 per cent for the country in the first quarter of this fiscal. The gross value added (GVA) is estimated at 15 per cent. It also foresees the possibility of a wide divergence between GVA and GDP because of strong tax collections. A substantial recovery is visible in corporate GVA as well, it said#
Another interesting point is the difference in the perceptions and expectations as revealed by the Reserve Bank of India (RBI) consumer confidence survey. RBI releases its consumer confidence survey every two months that tracks perceptions and expectations on general economic situation, employment scenario, overall price situation and own income and spending in 13 major cities.
Interestingly the correlation (since Q1 FY19) between the percentage year-on-year (YoY) growth of Consumers Future Expectations Index and real GDP growth, which was highly positive (0.76) till Q4 FY21, decelerated sharply to 0.66, if RBI’s Q1 GDP growth number is included, SBI said.
This indicates that there is a disconnect between what the consumers expect and the growth numbers. One reason may be huge base effect that also affects statistics but not the expectations.
Meanwhile, business activity index based on ultra high frequency indicators show a further increase in August 2021.
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