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GDP may grow faster than estimated in Q4
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SME Times News Bureau | 25 May, 2021
There is both good news and bad news on the economic front for India
that is looking to come out from the second and deadlier wave of Covid
pandemic.
The good news is that the country's GDP is expected at
faster pace than expected in January-March quarter of 2021 as a pick up
in economy activity during the period of fading pandemic surge has
resulted in higher than expected output from various sectors.
But
the bad news is that Covid 2.0 and continuing lockdowns in various
parts of the country may push all hopes of faster economic recovery in
FY22 downwards with GDP only managing to grow in single digit this year
rather than high double digit growth projected earlier.
As per
an Ecowrap report prepared by a research team from SBI headed by banks
group chief economic adviser Soumya Kanti Ghosh, GDP growth for Q4
(FY21) would be around 1.3% (with downward bias) as against NSO
projection of a negative -1%.
With this, the report has projected
that GDP decline for the full year would now be around 7.3% (compared
to our earlier prediction of -7.4%).
"However, due to renewed
lockdowns in almost all states since April, 21 owing to rise in
infections, we believe that real GDP growth for FY22 would be in single
digits as against our earlier forecast of 10.4%," the SBI Ecowrap report
said.
The report's assertion on higher Q4 growth has also been
based on corporate performance during the period. It said that corporate
results so far also reinforce the fact that Q4 growth would be much
better than the Q3 growth. The corporate GVA of 625 companies has
expanded by 62.04% in Q4 as compared to 12.98% growth in Q3 (of 4164
companies ).
"However the entire projection for Q4 FY21 is
dependent on how much the past data will be revised by NSO. Past
experience on data revision indicates that apart from providing data for
Q4 NSO also revises quarterly data for present/previous fiscal year
and annual GDP estimate," Ecowrap report said.
Though the
country-wise real GDP data indicates that the situation has improved
over one year (after battling from second/third wave of Covid-19), most
of the countries are still in recession and their Q1 2021 (or Q4 FY21)
real GDP growth was in contraction mode. The decline of average real
GDP for 24 countries has improved from 2.9% in Q4 2020 to a decline of
0.3% in Q1 2021. Very few countries exited recession in Q1 2021 with
contraction ranging from (-)6.1% (UK) to 18.3% (China).
Interestingly,
had India's growth rate crossed 1.7% in Q4FY21, India would have been
the second fastest country after China in terms of GDP growth, and going
by Ecowrap reports estimate of 1.3% GDP growth, India would still be
the 5th fastest growing country amongst 25 countries (that have
released their GDP numbers so far).
"We hope for such optimism in terms of Covid-19 numbers and vaccination soon," the report said.
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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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