Lockdown

These drivers will make it the world's third-largest economy and stock market before the end of the decade, Morgan Stanley said in a report titled, "The New India: Why This Is India's Decade". India's GDP is likely to surpass $7.5 trillion by 2031, more than double current levels, making it the third-largest economy and adding about$500 billion per annum on an incremental basis over the decade, the report said.

The major economic parameters reveal slow post-pandemic recovery, with gross domestic product (GDP), goods and services tax (GST) collections, electricity demand, credit growth and auto sales growing somewhat slowly as against the expectations. Kotak Securities attribute the weaker-than-expected recovery to the slow 'repair' in the income of low-income households.

A cautious government, mindful of the looming threat that current account deficit may reach 3 per cent of the GDP, had recently taken some measures through the Reserve Bank of India (RBI) to bring it down. Experts, however, feel that unless exports don't rise and import dependency does not come down, the Indian rupee's depreciation will continue and inflation will shoot up.

Addressing a conclave on "Fin-Tech and Credit Expo 2022 - Connecting Finance to Business", Riddhi Gupta, Head of Strategy and Alliances, Invoicemart, said that MSMEs have a significant role at the centre of the vibrant Indian economic landscape. "There is a lot of opportunity to ensure that MSMEs grow into an even more powerful engine. Contribution of MSMEs to GDP is still lower than that in countries like the US or China," she said.

Though the GDP growth was below estimates, a revival in domestic demand was visible in strong growth in private consumption (59.9 per cent of GDP) at 9.1 per cent compared to the pre-pandemic level (Q1, FY20). Gross Fixed Capital Formation (34.7 per cent of GDP) recorded a growth of 3.6 per cent in the same period.

Out of this, 53.2 per cent of external debt was denominated in US dollars, the Indian rupee denominated debt was estimated at 31.2 per cent and was the second largest, according to the status report on India's external debt 2021-22, released by the Finance Ministry on Monday.

Interestingly, India had surpassed UK as the 5th largest economy as early as December 2021 itself and not recently as is being claimed. "The path taken by India since 2014 reveals India is likely to get the tag of 3rd largest economy in 2029, a movement of 7 places upwards since 2014 when India was ranked 10th. India should surpass Germany in 2027 and most likely Japan by 2029 at the current rate of growth," the report said.

"The downward revision is mostly to do with our Q1GDP estimate that was at 15.7 per cent," the report said. In the first quarter of the current financial year, the Indian economy grew by 13.5 per cent amid rebound in the growth of the service sector. The GVA grew by 12.7 per cent. Though GDP grew in double digits, but it still came way below the market expectations.

This is the first double digit growth in GDP figures in a year, as the last double digit growth was 20.1 per cent recorded in first quarter of 2021-22. "Real GDP or Gross Domestic Product (GDP) at Constant (2011-12) Prices in Q1 2022-23 is estimated to attain a level of Rs 36.85 lakh crore, as against Rs 32.46 lakh crore in Q1 2021-22, showing a growth of 13.5 percent as compared to 20.1 percent in Q1 2021-22," a statement issued by National Statistical Office (NSO) said.

At 1.40 p.m., the yield on 10-year benchmark 6.54 per cent-2032 bond yield was trading at 7.2046 per cent as compared to 7.2534 per cent closed on the previous trading session. The GDP data for April-June is scheduled to be released on Wednesday. Indian markets will remain shut on Wednesday on account of Ganesh Chaturthi.