Bikky Khosla | 07 Sep, 2021
The Indian economy grew over 20% in first quarter of
FY22. Gross Domestic Product grew at a record pace of 20.1% in the period as against
a contraction of 24.4% in the same quarter of FY21. There is no doubt that low base
contributed in a big way to these growth numbers, but it is equally important to
note that growth in first quarter of the current fiscal is reflective of the
fact that the economy is fast getting back to track with the Covid situation
A detailed look shows that while agriculture output
grew 4.5%, manufacturing and construction rebounded strongly in the first
quarter from the year ago. The manufacturing sector expanded 49.6% while construction was up 68.3%. Core
sector output grew by 9.4% .This data is
encouraging. The gross fixed capital formation data, which shows
growth of 55.26% against 24.4% in the previous quarter, is inspiring again.
Some recent high frequency indicators reflect a similar
trend. GST revenue collection remained above the psychological mark of Rs 1
lakh crore for the second consecutive month, in August 2021. Similarly, power
demand and auto sales have been on a rise. Merchandise exports have registered
strong growth again in August, rising to $33.14 billion,
higher by 45.17% Year-on-Year. These data sets raise expectations of better days
ahead for the economy.
There are certain
watch-outs, however. Gross fixed capital formation constitutes 31.6% of
GDP as against 34.6% in the first quarter of FY20. Also, private final consumption
expenditure and government final consumption expenditure are still not that
encouraging. Private consumption has contracted 8.9% in the June quarter as
against the previous quarter. Some services sector, including tourism and
hospitality, etc. have continued to lag. The Centre should closely monitor
these concern areas.
I invite your opinions.