The Indian economy grew 20.1% in the first quarter of the ongoing financial year (FY22) on the back of a low base in the same quarter of FY21, according to latest data released by the National Statistics Office [NSO], under the Ministry of Statistics and Program Implementation. Standalone, this is the single largest quarterly percentage growth the country has witnessed since it started measuring quarterly gross domestic product numbers in 1996.
The value of the economy was ₹32.38 lakh crores compared to the same period (Q1) in FY21 (April to June 2020), where it was valued at ₹26.95 lakh crores. Quarterly growth estimates in India are relative to the same period in the last financial year (in this case, FY21).
The previous such comparable number was the estimate of Q1 in FY21 (April 2020 to June 2020) over that of FY20 (April 2019 to June 2019), which saw the economy contract 24.4% due to the full hit it took by the rise of the first set of lockdowns as a response to COVID-19 pandemic. However, this also means that a favourable base effect has lent itself to the current pace of growth (20.1%).
The economy has grown by this magnitude despite witnessing the onset of fresh lockdowns due to the second wave of the COVID-19 pandemic in the months of April and May this year.
"With a view to contain the second wave of the Covid-19 pandemic, localized and calibrated lockdowns were imposed during the first quarter of 2021-22. Restrictions were imposed on the economic activities not deemed essential, as also on the movement of people. The lockdown instructions in various States were duly considered by the National Statistical Office. The impact on economic activities and the data collection mechanisms owing to COVID- 19 pandemic has an effect on the Quarterly GDP estimates also. The impact of these measures on overall economic activity are embedded in source data", said the NSO.
Further, the income side of various sectors of the economy, measured by the gross value added, grew 18.8% quarterly (again measured over the same period in the previous year).
The estimates are largely in line with what research houses and brokerages predicted about the first quarter growth. 40 economists polled by Reuters said that the first quarter growth would be near 20%. The Reserve Bank of India also forecasted that the economy would grow 18.5% in the previous quarter. However, the same RBI estimates also says that growth from hereon will be in the single digits.
Nonetheless, this is the third consecutive quarter of growth after two successive quarters of economic contraction bought in due to lockdowns and the pandemic, that saw the country go into a technical recession. The Indian economy contracted by 7.3% in FY21.
For the full year though (FY22), bodies like the RBI and IMF maintain that the economy will grow in the single digits, more specifically 9.5%.
The press release of the NSO can be found here.