All eyes are on India’s Economy from April to June or First Quarter GDP data figures that are to be out Tuesday Evening when India witnessed a severe record second deadly wave of Covid 19.
The lockdown was mainly seen in less number in the Second wave as compared to the earlier case.
The report says India’s economy had jumped in this quarter from a deep slump last year; manufacturing improved it despite a devasting second wave of covid 19.
Asia’s Third Largest Economy got the most significant setback in the economy with substantial economies worldwide.
India’s GDP or Gross Domestic Product grew 20.1% during April to June Quarter while the Gross Value Added or GVA was around 18.8%. The Statics and Programmer implementation (MoSPI) showed the data.
India’s GDP contracted by 24.4% from April to June in FY2021 as to curb the spread of coronavirus, the country went into a lockdown. It was the steepest and devasting quarterly contraction in the history of Independent India.
As per a roll of over 41 economists by a news agency, India’s GDP growth expects to be around 20% in April-June 2021.
According to the latest Monetary Policy Committee resolution passed on August 6, the Reserve Bank of India has estimated figures from 26.2% has been revised and is now estimated to be 21.4%.
In the first quarter, the manufacturing sector rose around 49.6% this year, while the construction sector excellent 68.3%. These two industries are the primary factor giving such growth for the current year.
Also, these two industries are the only industry in which such positive growth has been. Yes, they got contracted due to curb and restriction applied for lockdown, but it has a significant boost for the current year.
The trade, hotels, transport communication and services related to the broadcasting industry gained a significant 34.4%.
Agriculture, Forestry and Fishing were the only sectors seen in positive mark at 3.5%, and for the current, it has grown to 4.5%.
Unlike western countries and some Asian countries, India didn’t announce any stimulus support to the nation.
In comparison, India opted for raising spending on infrastructure and privatization to bolster the midterm growth prospects while also providing free food grains to the poor people.
Is Low base effect a genuine reason for significant growth?
One of the primary reasons for this phenomenal and significant jump in GDP growth is the ‘low base effect’.
In simple words, this means the base year or month in which the figure is being compared. Data comparison is always made with the same quarter last year or the previous quarter’s quarterly or annual GDP growth.
When the pandemic stuck in India in 2020, the government imposed a very strict nationwide lockdown to curb the spread of the coronavirus.
This has a significant impact on the growth of Q1 GDP, which was slumped b a recorded 24.4% in Rs 26.95 lakh crore compared to Q1 of 2019-20 of Rs. 35.7 lakh crore.
The World Economic Outlook in their July edition, the IMF has projected India to grow at the fastest pace compared to other economies around the world at 9.5% during 2021.
The Reserve Bank of India (RBI) earlier forecasted a similar growth of 9.5% in the current fiscal year. However, there are concerns and warnings for the possibility of the third wave in the country.
While the US is believed to have a growth of 4.9%, the Euro Area expects growth of 4.3%, and major economies in Europe such as Germany and France are likely to see a gain of 4.1% and 4.2%.
Where do Developed Nations economies stand?
The low base effect has played a significant growth in every major country. As per the State Bank of India (SBI) report, economists have claimed the soft base effect has resulted in double-digit real GDP growth in most countries.
The United States are among the first g-& economies to enter a pre-pandemic level of output, leaving its European peers that had suffered significantly sharper contractions when covid-19 struck the world.