India’s economic growth rate could come in between 7.8 to 8.3 per cent in the three-month period ending on September 30. Economists said this will not be just because of base effect but also due to real expansion of the economy.

Economists also pointed out that while demand has picked up for manufactured products as well as for services, improved expenditure by the government in August-September period is also expected to help in growth acceleration. Economy decelerated by 7.4 per cent during July-September period of FY2020-21. The government will come out with second quarter number for the current fiscal on November 30. Growth rate for first quarter (April-June) of this fiscal was 20.1 per cent.

A report by State Bank of India forecasted second quarter growth at 8.1 per cent. This is based on improvement in high frequency indicators such as GST collections, generation of e-way, Purchasing Managers’ Index (PMI) etc. besides others. The report said that 8.1 per cent estimate is highest across all economies. Also, “at an annual rate of 9.3-9.6 per cent, India’s real GDP growth would now be 1.5-1.7 per cent higher than the pre-pandemic level of FY20,” the report said.

The Finance Ministry has not given any projection for the second quarter, while the RBI estimates growth at 7.9 per cent for second quarter.

Economists’ view

Swati Arora of HDFC Bank projected GDP growth rate at 7.8 per cent on year-on-year basis. Some part of it is due to a low base from year when the economy contracted by 7.4 per cent (Q2FY 21), she said.

“That being said, there has been a sequential improvement in GDP growth in Q2FY22. On a sequential basis, GDP is expected to grow by 9.75 per cent in Q2 from a contraction of 16.9 per cent in the previous quarter, reflecting a revival in economic activity supported by pent-up demand, a pick-up in vaccination drive and as second wave related restrictions eased,” she said while concluding that it’s not just base effect at play but also support from a pick-up in economic activity in the second quarter.

Yuvika Singhal, Economist with QuantEco said: “On the back of a strong sequential pick-up, we are estimating Q2FY22 GDP growth at 8.5 per cent.” She also pointed out that the waning of Covid infections which allowed progressive easing of lockdown restrictions at the State level, along with progress on vaccination have been key growth stimulants in this quarter. Further, inventory build-up ahead of the festive season along with pick-up in government spending in the month of September 21, are likely to have offered back-loaded support to economic activity. As such, a healthy pick-up in momentum of both industry and services sector output is expected, she said.

“Progress on vaccinations, with a focus to close the gap between the first and second doses, will help abate economic consequences of a third wave, if any. We hold on to our FY22 GDP growth estimate of 10 per cent with mild downside risks, amidst support from a steady recovery in consumption, continued strength in exports led by global growth and broadly accommodative monetary and fiscal policies,” she said.

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