India’s GDP continues to grow and recover, registers 8.4% GDP growth in Q2 FY22

Source : India Today / Business Standard

India's GDP growth remained steady during the second quarter due to higher vaccination rate and increased economic activity.

India's GDP growth remained steady during the second quarter due to higher vaccination rate and increased economic activity. (Photo: Reuters)

India’s economic growth remained strong during the second quarter after growing at a record pace in the first quarter of FY22. Official government data suggests that India’s gross domestic product (GDP) grew at 8.45 per cent during the July-September quarter.

The reason why GDP growth remained positive during the quarter was resumption of economic activity, aided by a higher vaccination ratio, and rapid improvement in the industrial and services sectors. Rising demand for essential and non-essential goods also contributed to the steady rise in GDP growth. 

The 8.45 per cent GDP growth is in line with what experts had predicted earlier. It may be noted that the GDP contracted 7.5 per cent during the same period last year due to the impact of the pandemic-induced lockdown on the economy.

The Government had imposed a nationwide lockdown at the onset of the COVID-19 pandemic last year. This year, a massive second wave of the pandemic hit the country in the middle of April, which forced states to impose fresh restrictions.

However, the economy has now surpassed the pre-COVID level.

In value terms, the GDP stood at Rs 35,73,451 crore in July-September 2021-22, higher than the Rs 35,61,530 crore in the corresponding period of the 2019-20 financial year.

The GDP had shrunk to Rs 32,96,718 crore in July-September last year during the nationwide lockdown. GDP at Constant (2011-12) Prices in April-September 2021-22 (H1 2021-22) is estimated at Rs 68.11 lakh crore as against Rs 59.92 lakh crore during the corresponding period of previous year, showing a growth of 13.7 per cent in H1 2021-22 as against a contraction of 15.9 per cent during the same period last year, it stated.

"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," Sakshi Gupta, senior economist, HDFC Bank told Reuters.

According to the NSO data, gross value added (GVA) growth in the manufacturing sector accelerated to 5.5 per cent in the second quarter of 2021-22, compared to a contraction 1.5 per cent a year ago.

Farm sector GVA growth was up at 4.5 per cent, compared to 3 per cent growth earlier.

Construction sector GVA grew by 7.5 per cent compared to a degrowth of 7.2 per cent earlier.

Mining sector grew by 15.4 per cent, as against a contraction of 6.5 per cent.

Electricity, gas, water supply and other utility services segment posted growth of 8.9 per cent in the second quarter of this fiscal, against 2.3 per cent expansion a year ago.

Similarly, trade, hotel, transport, communication and services related to broadcasting grew by 8.2 per cent compared to 16.1 per cent contraction earlier.

Financial, real estate and professional services growth stood at 7.8 per cent in Q2 FY22 compared to a contraction of 9.1 per cent.

Public administration, defence and other services grew at 17.4 per cent during the quarter under review, compared to 9.2 per cent contraction a year earlier.

Meanwhile, China has recorded a growth of 4.9 per cent in the July-September period of 2021.