Lockdown

The report comes a day after the National Statistical Office (NSO) released the First Advance Estimates of National Income for financial year 2021-22. Accordingly, the estimates had said that India's economy is expected to clock a growth of 9.2 per cent in terms of real GDP for FY22. The NSO data had indicated that Real GDP' or 'GDP at Constant Prices' (2011-12) in the year 2021-22 rose to Rs 147.54 lakh crore from Rs 135.13 lakh crore.

In 2020-21, India's economy had contracted by 7.3 per cent. On Friday, the First Advance Estimates of National Income for financial year 2021-22, estimated that 'Real GDP' or 'GDP at Constant Prices' (2011-12) in the year 2021-22 rose to Rs 147.54 lakh crore from Rs 135.13 lakh crore, the 'Provisional Estimate of GDP' for the year 2020-21.

As per the data, CPI inflation jumped to three-months high of 4.9 per cent which was led by higher core inflation. Data furnished by the National Statistical Office showed that Consumer Price Index (CPI) inched up to 4.91 per cent last month from 4.48 per cent in October 2021. However, on YoY basis, the rise in last month's retail inflation was lower than the 6.93 per cent rise recorded for November 2020.

A relatively stable services trade surplus is expected to cushion the deficit. "A stable services trade surplus of $24 billion would help rein in the current account deficit at $10.1 billion in 2QFY22. The current account was in surplus of $6.5 billion in Q1FY22," the rating agency said.

Besides, pent-up demand, higher exports along with a rise in service activity amid further improvement in mobility supported the uptrend. The accelerated vaccination drive also played a role in this YoY rise as it brightened consumer sentiments. On a YoY basis, India's GDP growth rate had fallen by 7.4 per cent during the corresponding period of the previous fiscal. On a sequential basis, the GDP growth rate during Q2FY22 was lower than the rise of 20.1 per cent recorded for Q1FY22.

Besides, rise in service activities amid further improvement in mobility and increased government spending will support the trend, industry watchers said. Economy watchers contend that accelerated vaccination drive along with easing of Covid restrictions has brightened consumers' sentiments. The expected rise in agricultural output on the back of a healthy rainy season during the July-September period should boost the GDP growth to anywhere between 7 per cent and 9 per cent.

The share of Government Health Expenditure in total health expenditure has also increased overtime. In 2017-18, the share of government expenditure was 40.8 per cent, a significant rise from 28.6 per cent in 2013-14. The NHAE report findings also show that the government's health expenditure as a share of total expenditure has increased from 3.78 per cent to 5.12 per cent between 2013-14 and 2017-18.

As per the ratings agency, gradual removal of lockdown restrictions by most states towards the end of the last quarter will also help the GDP to grow. Besides, it predicted a GVA growth of 7.5 per cent on YoY basis in Q2FY22. According to the agency, the steady progress in vaccination has improved consumer sentiments. Furthermore, the economy has been supported by relative resilience of the industrial sector and a gradual rebound in services sector with improved mobility, buoyancy in exports, and improved government capital expenditure.

According to the ratings agency, Q2FY22 GDP is expected to grow at 8.3 per cent year-on-year on the back of a faster-than-expected revival in economic activities as well as a decline in new Covid cases, leading to sustained improvement in growth prospects.

The real GDP is the inflation adjusted figure of all the finished goods and services produced in a country within a specific time period. In a report, MOFSL said its in-house estimates suggest India's real GDP grew at 8-9 per cent YoY in Q2FY22, marginally higher than "our expectations".