India's GDP Grows By 8.4% In July-September Quarter As Covid Disruptions Ease

Economic recovery strengthened in the July-September quarter helped by a pick-up in consumer spending, though the spread of the Omicron coronavirus variant raises fears

New Delhi: As Covid-19 disruptions ease, the gross domestic product (GDP) growth rate of India for the second-quarter for the financial year 2021-22 (FY22) clocked 8.4 per cent, as against a contraction of 7.4 per cent in the corresponding period of the previous fiscal year, data from the government showed on Tuesday.

According to the data released by the Ministry of Statistics & Programme Implementation, GDP at constant (2011-12) prices in Q2 2021-22 is estimated at Rs 35.73 lakh crores, as against Rs 32.97 lakh crores in Q2 2020-21, showing a growth of 8.4 per cent as compared to 7.4 per cent contraction in Q2 2020-21.

This marks a fourth straight quarter of expansion. However, the economy has now surpassed the pre-Covid levels.

Economic recovery strengthened in the July-September quarter, helped by a pick-up in consumer spending, though the spread of the new Omicron coronavirus variant raises fears for the future. Economy has gained pace, and gradually inching back to normalcy as Covid-related disruptions eased in the aftermath of a devastating second wave.

The data shows that nominal GDP grew at 17.5 per cent for the second quarter of the current fiscal year.

The gross value added (GVA) grew at 8.5 per cent for Q2, as compared to 7.3 per cent in the same quarter last year. Private final consumption expenditure grew to Rs 19.48 lakh crore in the quarter under review.

Output of the eight core sectors rose 7.5 per cent in October this year, while the fiscal deficit reached 36.3 per cent of the full year Budget estimate for the first seven months.

Private Final Consumption Expenditure (PFCE) in the July-September quarter rose by 8.61 per cent on year in Q2, but down from a rise of 19.35 per cent on year in Q1.

The GDP numbers for the second quarter were in line with the most projections by leading brokerages and financial institutions.

India, which is Asia’s third-largest economy, has been seeing a rebound from last year’s slump, boosted by rising vaccination rates and a pick-up in government spending.

The Reserve Bank of India (RBI) in October retained its growth forecast at 9.5 per cent for FY22. The economy is expected to clock 7.9 per cent in Q2, 6.8 per cent in Q3, and 6.1 per cent in Q4 of 2021-22, the RBI said.

According to economists, Indian economy is on the cusp of recovery helped by a resilient farm sector growth, however, risks included slowing global growth, rising manufacturing prices and new variants of Covid-19.

In a latest tweet, Chief Economic Advisor, Dr Krishnamurthy Subramanian said, "Conceptually, the Indian policy response focused on both demand & supply has been very important in the sharpest recoveries among all emerging economies & in keeping inflation rangebound. Compared to 2020, there has been a 38.3 per cent increase in capital expenditure in the first half of 2021, which is noteworthy. Since capital expenditures are much higher this year, it's important to understand the inflation dynamics."