EJ Explains: India set to report record GDP at 20%, what does it really mean for growth | Editorji
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EJ Explains: India set to report record GDP at 20%, what does it really mean for growth

Aug 31, 2021 12:20 IST | By Editorji News Desk

Be ready to see a never before growth number at 5:30 pm today as the Govt will release the April-June GDP which is likely to clock in at a record 20% as per economists. But is this growth realistic and how should one really read this number #EJBiz breaks down the growth realities:

The Estimate
According to 23 economists polled by Bloomberg, GDP is estimated to rise by 20% for April-June. This may be lower than the latest projection by the RBI's rate setting committee which pegs it at 21.5% but is still the highest growth India would see since the data started to be reported in the mid 90's. 

The Low Base Leverage

Large part of the 21% growth comes from an extremely low base, flashback to 2020 April-June where nothing in the country was functioning and economic activity was paralysed by the pandemic induced nationwide lockdown. So if one actually does the calculation on a Quarter on Quarter basis, one actually would see growth contracting vs Jan-March of 2021. 

It's Not Gloom and Doom Anymore

The second wave in the quarter gone by did not out a halt to the economy like last year and the numbers are likely to reflect an economy on the mend.  Manufacturing sector is likely to show a big jump in growth at over 50% and the most important component Consumption Expenditure is also likely to show a growth of over 20%. Signalling that building and spending, the main blocks of the economy as cementing back into shape. 

Here are the estimates we are working with for this evening-:

  • GDP for April-June seen at 20% vs -24.4%  (YoY)
  • Manufacturing growth seen at 50% vs 6.9% in Jan-March
  • Agriculture growth seen slugging at 2.5% 
  • Trade and Transport to see growth of over 62% 

EJ Explains: India set to report record GDP at 20%, what does it really mean for growth

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