The economists state the growth rate of 20.1% is an illusion, and here’s why


The economic growth rate has increased to a massive 20.1 %, as predicted by the economists earlier. But this growth is also stated as ‘illusion’ or ‘deceptive’.

India’s growth rate in the first quarter of FY22 has seen a growth of 20.1%, which is a record in itself. 

According to the official report released recently, this growth is a massive record. Even if the economists had predicted this growth, it’s because of a weak base and recently increased consumer demand.

Economic Rise:

Economic rise up to 20.1 % in the first quarter of FY22, i.e., April-June, is being said to be because of the sharp contrast in the economy during the same period last year and hence was predictable as noted by economists.

Aditi Nayar, the chief economist at ICRA, forecasted that the GDP level had shrunk relative to the GDP of last year. She further added that “The double-digit expansion expected in YoY terms in Q1FY22 is deceptively high, as it benefits inordinately from last year’s contracted base.” 

The figures shown in the data released by officials can come across as massive, but this is not the case when the GDP hit a low of 24.4 % last year. It is more deceptive or an illusion. 

The economists have been reluctant that this year’s GDP growth is more of an illusion because of the stark contrast in the growth last year. It’s known as a low base effect because the economy dipped to 24.4 % last year so that we might have higher GDP in comparison.

The country faced a massive drop in GDP last year. When the first wave of coronavirus hit India, the results were devastating.

The government went down in a strict lockdown, and everything from malls to shops to all other industries was closed. It took an urge toll on the economy and even people’s lives, both mentally and physically. 

However, during the second wave of coronavirus, the country started to open gradually and recover even if it remained slow. During the second wave, the county saw had lesser restrictions and easier lockdowns. The businesses began, and transport services were starting too. 

Slowly the school and colleges have started opening, leading to a better business-wise situation. Even if it is a better situation on papers and reports, India still has a long way to recover its economy. 

And we still can’t predict growth in terms of GDP. Economists advise using different measures like demand, investments, exports, manufacturing data, factory output and core sector growth as the base to calculate real change.

GDP rate strikes 20.1%, which is the highest ever since the mid-90s.Economists aren’t pleased about the 20.1% rise in the GDP, and here was why.

Anupriya Yadav
Anupriya Yadav
Scribbling some words to live forever, journaling emotion of the world



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