Here are the key takeaways from govt’s Q2 GDP report card

The Indian government said on Tuesday gross domestic product (GDP) grew by 8.4% in the July-September quarter, beating analysts’ expectations.  

The economy had contracted 7.4% during the corresponding period last year as the country was just beginning to emerge from the aftereffects of a nationwide lockdown that was imposed towards the end of March 2020 to halt the spread of the coronavirus pandemic.

The first quarter of the current financial year had seen the GDP grow by 20.1%. However, that superlatively high figure was on account of the base effect over the April-June period in 2020, when the economy had shrunk 24.4%.

In Gross Value Added (GVA) terms, too, the economy expanded by 8.5% during the second quarter this year, again beating analysts’ expectations.

GDP data: Key highlights

1) GDP during April-September grew 13.7% as against a contraction of 15.9% during the same period last year.

2) Private final consumption expenditure grew 9.2% to Rs 19.48 lakh crore in the July-September quarter, up from Rs 17.83 lakh crore in the first quarter.

3) Government final consumption expenditure shrank 14% to Rs 3.6 lakh crore from Rs 4.21 lakh crore.

3) Manufacturing sector grew 5.5% in the second quarter, construction expanded 7.5%.

4) Agriculture sector grew at 4.5% in Q2; Mining output soared 15.4%.

5) Service sectors recorded robust growth, with hotels, transport and communication expanding 8.2%.

6) Financial, real estate and professional services grew 7.8% while electricity, water and gas rose 8.9%

Other key data

The government also released several other data sets that paint a picture of the economy. It said that output of the eight core sectors rose 7.5% in October. The production of coal, natural gas, refinery products, fertilizers, steel, cement and electricity increased in October over the corresponding period of last year.

Fiscal deficit reached 36.3% of the full-year budget estimate for the first seven months from April to October.

Revenue receipts for the April-October period stood at Rs 12.6 lakh crore, or 70.5% of the budget estimate. This is higher than the 34.2% of the budget estimate collected during this period a year earlier.

How does India’s budget spending look?

India could overshoot its targeted budget spends. This may happen as the government extended the free food grain distribution scheme, and will also have to settle Rs 44,000 crore in Air India’s liabilities, as it looks to sells the airline to the Tata group within the financial year. 

Moreover, a cut in fuel cess in the wake of the crude price rise, and a shortfall in disinvestment targets, could mean that the Centre’s math may go awry. 

So, how did the economy manage to stage a turnaround?

It happened on account of an increase in private consumption and investment as well as the base effect, if compared to the last year, as the economy was almost completely shut because of the lockdown.