Fiscal Push: India's Q2FY22 GDP growth seen between 7-9%

By Rohit Vaid

New Delhi, Nov 29 (IANS) Healthy monsoon season along with pent-up demand are expected to accelerate India's Q2FY22 GDP growth rate to over 7 per cent during Q2FY22, experts said.

Besides, rise in service activities amid further improvement in mobility and increased government spending will support the trend, industry watchers said.

Economy watchers contend that accelerated vaccination drive along with easing of Covid restrictions has brightened consumers' sentiments.

The expected rise in agricultural output on the back of a healthy rainy season during the July-September period should boost the GDP growth to anywhere between 7 per cent and 9 per cent.

However, waning base effect as well as high fuel and commodity costs would cap the upside to growth.

The official GDP number for Q2FY22 is slated to be released on November 30.

"GDP in Q2FY22 nearly recovered to the pre-Covid period, a significant improvement from the previous quarter that was besieged by the second Covid wave," said Aditi Nayar, Chief Economist, ICRA.

"In YoY terms, however, most sectors will report a base effect-led moderation in growth," Nayar added.

The agency hds recently revised its GDP growth expectations for Q2FY22 to 7.9 per cent.

"We see Q2FY22 GDP growth expected at 9 per cent YoY versus 20.1 per cent in Q1 with the moderation being led by waning base effect support," said Madhavi Arora, Lead Economist, Emkay Global Financial Services.

"The sequential uptick in growth is likely to be led by services amid further improvement in mobility and increased government spending," she added.

Last year, a near complete nationwide lockdown had led to a 7.5 per cent YoY contraction in Q2FY21 GDP.

"We expect India's GDP and GVA to grow by 8.5 per cent YoY and 7.5 per cent YoY, respectively, in Q2FY22 amid some support from a favourable statistical base along with a gradual removal of lockdown restrictions by most states towards the end of the last quarter," said Suman Chowdhury, Chief Analytical Officer, Acuite Ratings & Research.

"The steady progress in vaccination and the improvement in consumer sentiments have also been supported by the relative resilience of the industrial sector, a gradual rebound in the services sector with improved mobility, buoyancy in exports and improved government capital expenditure," Chowdhury added.

India Ratings and Research (Ind-Ra) expects GDP growth to come in at 8.3 per cent in 2QFY22 and 9.4 per cent in FY22.

"Consecutive nine quarters of over 3 per cent agriculture gross value-added growth has brightened consumer spending. Therefore, Ind-Ra expects private final consumption expenditure to grow close to 10 per cent in 2QFY22. Even investment activities have found support from the government's focus on infrastructure," it said.

Ind-Ra expects the fixed capital formation to grow at around 8.5 per cent in 2QFY22.

"The Union government's capex grew 51.9 per cent in 2QFY22 and aggregate capex of 24 state governments grew 62.2 per cent in 2QFY22. However, private capex revival is still slow and limited to select sectors," it said.

(Rohit Vaid can be contacted at [email protected])