GDP grows 20.1% in Q1 but shows impact of second Covid wave

India’s gross domestic product (GDP) grew 20.1% in the April-June quarter of 2021-22 from the low base of last year when the country was under a strict lockdown for almost two months to control the Covid-19 pandemic. The GDP had contracted 24.4% in the first quarter of 2020-21, the deepest quarterly contraction India ever recorded.

The GDP print for the first quarter is on a par with estimates in a Reuters poll of 41 economists, which had projected a 20% expansion. But it was a tad below the Reserve Bank of India’s projection of 21.4%.
According to data released by the National Statistical Office on Tuesday, the real gross value added for Q1 rose 18.8%.

Trade, Hotels, Transport and Communication Services Grew Fastest

Trade, hotels, transport and communication services recorded the fastest growth, at 68.3%. This sector had contracted 48.1% in the April-June period of last year. The manufacturing sector grew 49.6%, bouncing back after shrinking 36% in April-June last year.

While the comparison with year-earlier numbers shows the economy has rebounded strong, the impact of the devastating second wave of Covid-19 is clearly evident. The second wave hit India hard during April-

May this year, leading to several localised lockdowns and hurting business activity. This is obvious from the fact that India’s gross domestic product in absolute terms was Rs 32.38 lakh crore during April-June this year, down from Rs 38.96 lakh during the January-March period.

Another example is Private Final Consumption Expenditure, which indicates household consumption. Private Final Consumption Expenditure as a rate of GDP was 55.1%in the first quarter of this fiscal year compared with 55.4%a year earlier. The silver lining, however, is the increase in Gross Fixed Capital Formation to 31.6%from 24.4%.