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'India's GDP expected to grow by 0.7% in Q3FY21'
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SME Times News Bureau | 16 Feb, 2021
India's GDP is expected to record a year-on-year rise of 0.7 per cent in
Q3FY21, thereby ending the recession created by the nationwide lockdown
imposed last year to curb the spread of Covid-19, rating agaency ICRA
said on Tuesday.
The forecast shows a turnaround from the 7.5 per
cent contraction in Q2FY21, benefitting from a pickup in private
consumption and government spending. Besides, the mild forecasted growth
in Q3FY21 signifies that the economy has exited the Covid-19
pandemic-induced recession after two quarters.
ICRA expects the
gross value added (GVA) at basic prices to have risen by 0.7 per cent in
Q3FY21, in contrast to the 7 per cent contraction in Q2FY21.
According
to ICRA's Principal Economist Aditi Nayar: "Encouragingly, almost all
the non-agricultural lead indicators that we track, recorded a
continued, albeit uneven, improvement in volume terms in Q3 FY2021. This
pickup benefitted from the continued unlocking of the economy, uptick
in consumption during the festive season, as well as higher Central
government spending. Moreover, most of the tracked indicators rebounded
to a growth on a YoY basis in that quarter, although this was on the low
base of Q3 FY2020."
But sectors such as aviation continued to contract in Q3 FY2021.
ICRA
noted that the Index of Industrial Production recorded a sedate 1 per
cent rise in the just-concluded quarter while rising raw material prices
contributed to lower margins in some sectors.
However, the
profitability for a large portion of the formal listed space remained
healthy, benefitting from the cost-cutting measures that had been
undertaken at the peak of the pandemic as well as rising volumes.
"In
our assessment, the formal part of the Indian economy has shrugged off
the pandemic blues and is gaining traction at the cost of the smaller
and less formal segment. This is hastening the process of the
formalisation of the economy and contributing to a consolidation in
favour of the larger and more reputed players in certain sectors.
"While
the informal and contact-intensive sectors will certainly heal more
gradually, the lack of adequate proxies constrains a deeper analysis of
the state of their recovery," the rating agency said.
On a
sobering note, the January 2021 round of RBI's Consumer Confidence
Survey of respondents in 13 major cities indicated only a modest pickup
in consumer sentiments.
In contrast, healthy kharif output and crop procurement continued to buoy rural farm sentiment.
Moreover,
the migration of labour back to urban areas is expected to have
restarted remittances and added to the consumption of the non-farm part
of the rural economy.
"ICRA expects that the revival in Central
Government spending supported the Indian economy's exit from the
recession in Q3 FY2021," Nayar said.
Further, the government of
India's capital expenditure and net lending increased by a significant
117.7 per cent in Q3 FY2021, in contrast to the contraction of 39.1 per
cent in Q2 FY2021.
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
|
66.20
|
64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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