The Indian economy is expected to grow at 14-14.5 per cent in the first quarter of current financial year, according to domestic brokerage firm Prabhudas Lilladher. Last year, faced with severe second wave of Covid-19, the India's gross domestic product (GDP) grew at 20.1 per cent year-on-year after witnessing a contraction of 24.4 per cent in the financial year 2020-21 on account of nation-wide lockdown imposed to curb the spread of Covid-19 pandemic.
India’s Q1 GDP data is expected today at 5:30 pm.
With a view to contain the second wave of the Covid-19 pandemic, localized and calibrated lockdowns were imposed during the first quarter of 2021-22. Restrictions were imposed on the economic activities not deemed essential, as also on the movement of people nad that impacted the economy in first quarter of last fiscal, the government said then.
Meanwhile, the Reserve Bank of India has projected Indian economy to grow at 7.2 per cent for the current financial year. According to RBI, India's GDP is expected to grow at 16.2 per cent in first quarter followed by 6.2 per cent in second quarter, 4.1 per cent in third quarter and 4 per cent in the fourth quarter of current financial year.
RBI in its growth assessment earlier this month said, "Domestic economic activity is exhibiting signs of broadening. The south-west monsoon rainfall and reservoir levels are above normal; kharif sowing is progressing well, although it is marginally below last year’s level due to uneven rainfall distribution2. On the demand side, indicators such as production of consumer durables, domestic air passenger traffic and sale of passenger vehicles suggest improvement in urban demand. Rural demand indicators, however, exhibited mixed signals – while two-wheeler sales increased, tractor sales contracted in June over a high base though.”
“High frequency indicators of the services sector like railway freight traffic, port freight traffic, e-way bills, toll collections and commercial vehicle sales remained robust in June and July. Investment activity is also picking up – the production of capital goods recorded double-digit growth for the second month in a row in May and import of capital goods also witnessed robust growth in June. PMI manufacturing rose to an 8-month high in July. PMI services indicated continued expansion in July, although it fell from an over 11-year high of June. Capacity utilisation in the manufacturing sector is now above its long-run average3, signalling the need for fresh investment activity in additional capacity creation. Bank credit growth has accelerated to 14.0 per cent (y-o-y) as on July 15, 2022 from 5.4 per cent a year ago. Incoming data of corporates for Q1 indicate that sales and demand conditions and profitability of manufacturing sector remained buoyant," the central bank added.
“We expect GDP to grow by 14.0-14.5 per cent y-o-y in Q1 FY23 backed by low base and strong domestic demand. A broad based pickup was observed across consumption, services industry and investment. We expect the private final consumption expenditure, a measure of demand and gross fixed capital formation, a measure of investment, to grow by 16 per cent and 14 per cent, respectively. However, net exports will be a drag due to high average crude price during Q1,” said Ritika Chhabra, economist and quant analyst at Prabhudas Lilladher.
