India Ratings and Research on Friday revised down India's FY22 real GDP growth forecast to 10.1 per cent, from earlier projection of 10.4 per cent, citing the second wave of COVID-19 infections and slower pace of vaccination. At a time when large parts of the country are experiencing tremendous pressure on medical infrastructure, the agency said it expects the second wave to start subsiding by mid-May. Earlier this month, the Reserve Bank maintained its 10.5 per cent GDP growth estimate, but Governor Shaktikanta Das has flagged the rising cases as the biggest impediment to recovery.
The survey, however, said that GDP is expected to revert to growth terrain next year, when it is likely to grow by 7.2 per cent.
GVA growth in the manufacturing, farm and construction sectors tumbled.
The senior Congress leader also said over 90 per cent of jobs are in the SME sector which requires an urgent push to boost the economy.
Fitch Solutions sees RBI keeping benchmark interest rates unchanged during the fiscal to March 2022 following its decision to buy Rs 1 lakh crore of government bonds. "We had initially expected another policy rate cut to arrest the rise in government bond yields since the Union Budget announcement in February. "However, having an explicit bond purchase guidance from the RBI following the announcement of the G-SAP will also achieve a similar effect, if not even be more effective than a rate cut on capping the increase in bond yields," it said in a note. The Reserve Bank of India (RBI) held its policy repurchase (repo) rate unchanged at 4 per cent at its monetary policy meeting on April 7.
It is difficult to reconcile the GDP numbers with other economic indicators.
'Our preference remains for the less-expensive industrial stocks, which are showing good earnings momentum.'
India Inc's investment project announcement falls to Rs 11.3 trillion. In the coming months, the pace of investments would depend on how soon consumption demand picks up and private sector investment ramps up investment in infrastructure.
In fact, India's investment activity growth is also estimated to touch a 17-year low in FY20. With overall demand not showing signs of revival, investment activity may take longer to recover, economists said.
At the same time, the UN said in a report, the performance of private investment remains a key macroeconomic concern.
Chief Economic Adviser K V Subramanian on Monday said the overall impact of the second wave of COVID-19 on the country's economy is not likely to be large but cautioned about an uncertainty surrounding the pandemic going ahead. He further said that given the circumstances due to the pandemic, it is difficult to forecast if the country would achieve a double digit growth in the current fiscal. The Economic Survey 2020-21 released in January this year had projected GDP growth of 11 per cent during the current financial year ending March 2022.
Indian economy had grown at 6.6 per in 2013-14.
In the 2020-21 Budget, the prime minister and the finance minister are keen to stamp their narrative, after various rollbacks following the previous Budget, said top government sources. Besides the scheduled meetings, the sources said, the Prime Minister's Office is expected to hold several meetings with top secretaries and officials on various ongoing schemes, their performance and also how some of them could be tweaked for better results.
During the six-month period (April-September 2019), the Indian economy grew 4.8 per cent as against 7.5 per cent in the same period a year ago.
Aim of the project is to boost manufacturing on a sustainable basis and through it, overall economic growth.
India attracted an estimated $49 billion FDI in 2019, a 16 per cent increase from the $42 billion recorded in 2018.
Beside manufacturing, deceleration was also witnessed in sectors like agriculture, construction and electricity, gas and water supply.
C Rangarajan, chairman, Prime Minister's Economic Advisory Council tells Business Standard that the measures taken by the government will lead to economic growth of at least 6 per cent in FY14 against a decadal-low growth of 5 per cent in FY13.
Many analysts argue with limited space for a fiscal stimulus, the burden of lifting growth lies squarely on monetary policy.
'Political parties bring out money they have stashed away and start spending it. How large that spending will be depends on how much money has been stashed. So, you are going to have a strong upside coming from the election effect,' says Pronab Sen.
India's GDP is estimated to contract by a record 7.7 per cent during 2020-21 as the COVID-19 pandemic severely hit the key manufacturing and services segments, as per government projections released on Thursday. Amid overall decline in economic activities, some respite was provided by the agriculture sector and utility services like power and gas supply, which have been projected to post positive growth during the current fiscal ending March 2021.
After contracting for two quarters in a row, the Indian economy entered the positive territory with a growth of 0.4 per cent in the October-December quarter, mainly due to good performance by farm, services and construction sectors, official data showed on Friday. Trade and hotel industry registered a contraction of 7.7 per cent during the third quarter this fiscal, as the sectors continued to suffer on account of coronavirus pandemic. According to the data released by the National Statistical Office (NSO), the farm sector recorded a growth of 3.9 per cent, and the manufacturing sector output grew by 1.6 per cent in the quarter under review.
As a percentage of the aggregate Budget expenditure, it is 12 per cent.
Chief statistician T C A Anant says growth figure might go up once indirect tax data is fully in, however, he agrees that private expenditure is yet to pick up
The economic activities that registered growth of over 6 per cent in the second quarter are manufacturing, electricity, gas, water supply, other utility services and trade, hotels, transport and communication, and services related to broadcasting.
Fresh investments are constrained by tepid demand.
While the positive surprise has been the high growth in agriculture, the negative surprise is in the trade, transport, hotels segment where growth came lower than expected, says Madan Sabnavis.
The CSO estimate is, however, a bit lower than 7.4 per cent growth projected by the Reserve Bank for the current fiscal.
Index of industrial production data had also shown that the sector grew at 3.1 per cent after contracting in the previous quarters.
Since 2000-01, the Indian economy has shown the tendency of being unable to absorb all domestic savings as investments.
Indian economy had grown at decade low rate of 4.5 per cent in 2012-13. The economic growth in 2013-14 was 4.7 per cent.
While India's GDP growth slowed to five-year low of 5.8% in Q4, China grew at 6.4%.
Growth is going to be an important factor in contributing high tax revenue and in containing the fiscal deficit.
This time there has been a rather peculiar criticism of the latest GDP numbers.
While the finance minister had a great opportunity to come out with flying colours while presenting this last Budget of his government, he didn't, says Omkar Goswami.
However, economic growth in five years of the UPA and NDA cannot be compared because of the now complex back series data, reports Indivjal Dhasmana.
'The government has given up its focus on economic growth because it it not something Modi has been able to fully understand.' 'This explains the extraordinary focus on divisive politics by the BJP even at a time when the world's most important man in visiting India,' notes Aakar Patel.
India's GDP had recorded 7.5 per cent growth in the April-June quarter of last fiscal.
'Election years tend to see high government expenditure on unproductive schemes, though that money sloshing around can boost private consumption.' 'Again, it can mean higher inflation,' explains Devangshu Datta.
The size of the GDP in the second quarter of 2018-19 is estimated at Rs 33.98 lakh crore, as against Rs 31.72 lakh crore a year ago
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