In News: India’s gross domestic product (GDP) grew by 8.4% in the July to September quarter, compared to a 7.4% contraction a year ago, with the economy’s gross value added (GVA) rising 8.5%, the National Statistical Office said on Tuesday.
Factoring in the first quarter GDP growth of 20.1%, the first half of this year has recorded 13.7% growth and India is likely to record double digit growth for 2021-22 as a whole.
It shows that the recovery process is continuing to play out.
Economists, however, were not fully convinced about the extent and durability of this recovery and reacted with caution.
Though the absolute GDP in the second quarter (Q2) was 0.3% higher than pre-pandemic levels, there were still many worrying areas.
In particular, the insipid private consumption spending that still lagging below pre-COVID levels along with activity in employment-intensive sectors like construction and contact-intensive sectors like retail and hotels.
The base effect of negative growth last year also helped nudge the GDP numbers up.
Investments, largely from the Government, continued to remain the key growth drivers while private consumption is yet to show a decisive recovery.
On the domestic demand side, only gross fixed capital formation emerged positive in Q2 over the 2019-20 level.
Even if the pace of recovery is sustained in the next two quarters, India’s GDP for the year is expected to be only marginally higher than that in 2019-20 (by around 2%),”
Improvements in Demand and investments are expected to be limited and gradual given that even before the pandemic, the domestic economy was grappling with slowdown.
