India’s Gross Domestic Product (GDP) has grown by 8.4 percent in the second quarter of the financial year, as per the data released on Tuesday, 30 November, thereby succeeding the Reserve Bank of India (RBI)'s projections of 7.9 percent for this period.
The July-September quarter is the fourth quarter in a row that has witnessed a rise in the GDP.
What does the growth percentage of GDP for this quarter spell for the Indian economy? Here's what experts have to say.
A Cautious Welcome
Reacting to the latest GDP figures, former Finance Minister P Chidambaram said: "Let us extend a cautious welcome. It is NOT yet a 'V' shaped recovery...There are sectors of the economy that are still crippled and need help and time to recover."
Senior Economist at HDFC Bank Sakshi Gupta told Reuters that agricultural growth and a rise in investment provided support for the expansion of the GDP.
"The GDP growth for Q2 at 8.4% confirms that the economy gained traction in the second quarter. On the supply side, agriculture growth provided support, along with a pick-up in service sector growth at 10.2% as contact-intensive services improved along with financial and real estate sectors. On the demand side, investment growth provided support," she was quoted as saying.
A report released by HDFC Bank on 24 November had projected that the GDP will show a 7.8 percent expansion on a year-on-year basis for the September 2021 quarter.
Economist at Quanteco Research Vivek Kumar said that the GDP growth of 8.4% approximates his estimate.
"Sequentially, GDP expanded by a robust 10.4% quarter-on-quarter. Going forward, we expect the combination of further unlocking as well as a step-up in vaccination coverage to continue supporting sequential expansion, which would also benefit from festival-related demand, revenge spending, and pent-up demand," he was quoted as saying by Reuters.
'Not Yet Back on Track'
Professor of Finance and Congress spokesperson Gourav Vallabh lamented that GDP is not even at the 2019-20 levels yet, "forget about revival."
"GDP at constant prices in Q2 2021-22 is at Rs. 35.73 Lakh Cr. Pre-pandemic, in Q2 2019-20, we were at Rs 35.84 Lakh Cr. GDP is not at the 2019-20 levels yet. Forget about revival, we are not even back on track," he stated in a tweet.
Economist at Elara Capital Garima Kapoor has indicated that the retarded recovery of the industrial sector may have been a hindrance to the GDP growth for this quarter.
"Impressive momentum of vaccination, releasing of the pent up demand mainly in services sector, nascent uptick in private investment appetite and accelerated momentum of government spending in H2FY22 will remain supportive hereon, even as elevated inflation and weak rural sentiments are emerging as risks on the horizon."Economist at Elara Capital Garima Kapoor, as quoted by The Mint
Writing for The Business Standard, Chief Economist at CARE Ratings Madan Sabnavis termed the newly-emerged COVID-19 variant Omicron as a "probably the only speedbreaker" for economic activity.
"GVA growth at 8.5 per cent is impressive, though it comes over a negative base effect. However, when compared with growth in say Q2FY20, which was 4.6 per cent, this number would mean that we are ahead of the pre-COVID period. But GDP growth over Q2FY20 is marginal at just 0.3 per cent. This is indicative that there is some space to cover before we are back to pre-COVID levels," he opined.
(With inputs from Reuters, The Mint, and The Business Standard.)
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