Mr Suman Chowdhury, Chief Analytical Officer, Acuite Ratings & Research, comments on Q2GDP FY22 data
"India's Q2FY22 GDP print has been fairly close to our estimates of 8.4%YoY and reflects a healthy recovery in private consumption expenditure driven by an unlock of the economy, declining intensity of the pandemic and the significant progress on vaccination. The growth of 9.0% in government expenditure over the corresponding period of the previous year has also been an important driver. What is also encouraging to see is a 10.7% growth in gross capital formation, driven primarily by public capital expenditure although there are also signs of a pickup in private capex in the current fiscal. The absolute real GDP value has exceeded the pre-pandemic levels of Q2FY20 by 0.33%.
GVA has also kept pace with the GDP print, clocking 8.5%YoY and the data shows a broad based growth across sectors. Agriculture has continued to show a healthy growth of 4.5% while manufacturing has recorded a 5.5% increase, reflecting both a recovery in domestic demand and buoyant exports. The effect of unlocking is reflected in the 7%-8% growth in construction, trade, hotels, transport and financial services. What has also moved the needle meaningfully is the strong 17.4% growth in government services that include public administration and defence.
While a healthy economic performance in Q2 was expected, we foresee moderate headwinds in Q3/Q4 due to high commodity prices that can impact demand and the risks of another wave of the pandemic. Nevertheless, we persist with our forecast of 10.0% GDP growth for FY22."