NSO reports economy is gradually returning to normal with 9.2% GDP growth in fiscal 22
After recovering from a year of contraction, the India’s economic growth for fiscal year 21-22 is estimated at 9.2%, with a possible low impact of the third wave of Covid on the economy. This figure is supported by the increase in production in the agricultural, mining and manufacturing sectors. Following the second wave and a nationwide lockdown, GDP had contracted to 7.3% in the previous fiscal year.
According to the preliminary estimate published by National Statistical Office (ONS)India’s nominal GDP could reach 232.1 trillion rupees in FY22, compared to 203.5 trillion rupees in FY20. The gradual return to pre-pandemic levels for the second quarter of the fiscal year grew 8.4% from a year ago, one of the fastest rates among major economies, according to data released by the government.
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“Real GDP or GDP at constant prices (2011-12) for the year 2021-22 is estimated at 147.54 lakh crore, compared to the provisional estimate of GDP for the year 2020-21 of 135.13 lakh crore, released on May 31, 2021. Real GDP growth during 2021-22 is estimated at 9.2 percent compared to the 7.3 percent contraction in 2020-21, “the Ministry of Statistics and Program Implementation said in a statement.
The growth rate appears to be a little lower than what RBI had predicted earlier. Reserve Bank of India (RBI) projected a GDP growth rate of 9.5% for the current fiscal year with inflation seen at 5.3%. The World Bank and Moody’s forecast India’s economy to grow 8.3% and 9.3%, respectively.
While key sectors are expected to experience double-digit growth, private spending or consumer demand is expected to experience a modest recovery.
“Consumption is seriously down. Income shifted from people in the high consumption category to people in the high saver category. Then you get lower consumption even with relatively high income growth. The savings rate has increased. The investment data is reasonably good, which is a good sign. The change in inventories, which reflects the inventories held by producers, is high. It is part of the production but is not sold. The valuables are also huge, seem to suggest that people are buying jewelry, works of art, a sign of inequality and change in the distribution of income, ”said former chief statistician of India , Pronab Sen.
The ONS estimates significant growth in “mines and quarries (14.3%), and“ commerce, hotels, transport, communications and broadcasting-related services ”(11.9%). The agriculture sector is expected to grow 3.9 percent in FY22, up from 3.6 percent growth the previous year. Electricity production is expected to grow 8.5% against 1.9% last year.
While the real GDP growth rate is estimated at 9.2%, nominal GDP, which takes inflation into account, is estimated at 17.6% for 2021-22 compared to a contraction of 3% in 2020 -21. This reflects high prices, with inflation estimated at 8.4% for the entire year (inflation = nominal GDP – real GDP).