India’s gross domestic product (GDP) is expected to grow by 9.2% in the current financial year following last fiscal’s 7.3% contraction, the National Statistical Office (NSO) said in its first advance estimates of economic output released on Friday, amid concerns over the likely impact of a third wave of the COVID pandemic.
The NSO, however, made clear that these were “early projections” that did not factor in actual performance of various indicators as well as measures that may be taken to contain the spread of COVID-19.
“GDP at constant prices (2011-12) in the year 2021-22 is estimated at ₹147.54 lakh crore, as against the provisional estimate of GDP for the year 2020-21 of ₹135.13 lakh crore,” the NSO said, adding that growth in real GDP is pegged at 9.2%. “Real GVA at Basic Prices is estimated at ₹135.22 lakh crore in 2021-22, as against ₹124.53 lakh crore in 2020-21, showing a growth of 8.6%,” it added.
“The implicit GDP growth of 5.6% for H2 FY2022 built in by the NSO may not fully factor in the admittedly evolving impact of Omicron,” said Aditi Nayar, chief economist at ICRA Ltd. “Our sense is that after a 6.0-6.5% rise in Q3 FY2022, the GDP expansion is set to slip below 5% in the ongoing quarter,” she added.
The NSO’s GVA estimates show the mining sector outpacing others with growth of 14.3% following last year’s 8.5% contraction, followed by manufacturing which is seen expanding by 12.5% after shrinking 7.2% in the previous 12-month period.
Agriculture sector is estimated to grow at 3.9% in FY22 (3.6%). The electricity, water supply and other utility services category is estimated to grow at 8.5% (1.9%), while construction is expected to grow 10.7% (-8.6%) and trade, hotels, transport, communication and broadcasting services are projected to grow at 11.9% against a sharp contraction of 18.2% last year.
“Compared to the pre-COVID performance of FY2020, the advance estimates project an anaemic rise of 1.3% and 1.9%, respectively, for GDP and GVA in FY2022,” Ms. Nayar said.
“Most conspicuous amongst the disaggregated data is the weak performance of private final consumption expenditure and trade, hotel, transport, communication etc., which are pegged to trail their FY2020 levels by 2.9% and a considerable 8.5%, respectively, underscoring the lingering impact of COVID-19 on the Indian economy,” she added.
“These estimates have utilised available information up to the months ranging from September to December 2021,” said D.K. Srivastava, chief policy advisor, EY India. “As such, the likely adverse impact of COVID's third wave on the economy may not have been fully incorporated in these estimates. It is possible that another 20 basis points of growth may be shaved off from 2021-22 growth by the time the second advance estimates become available,” he added.