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Economists poll: India’s July-September GDP growth at 8.3%

By Anoop Agrawal

21:34, 29 November 2021

GDP in wooden block letters on coins in Increasing order with Indian flag as a background
A poll of economists shows second-quarter growth at 8.3% – Photo: Shutterstock

India’s economic growth for the July-September period would be the fastest in five years after activity revived in the quarter from Covid-led lockdowns, shows a poll of economists conducted by

With the government expected to announce the much-awaited economic growth figures for the second quarter of this financial year, the median of estimates made by five economists show gross domestic product (GDP) growth for the quarter ended 30 September to be at 8.3% – the highest since the comparable quarter of the financial year 2016-17.

The previous quarter or the three months ended 30 June this financial year ending March 2022 saw a GDP growth surge of 20.1% on a low base effect. India’s GDP had contracted 7.5% in the quarter ended 30 September of the financial year 2019-2020 improving from a -22.2% growth in the previous quarter.

“While a normalising base is expected to dampen the y-o-y (year-on-year) growth in GDP in sequential terms, the performance relative to the pre-Covid quarter is likely to have improved markedly in Q2FY2022 (quarter ended 30 September of the financial year 2021-22),”  said Aditi Nayar, chief economist at rating agency ICRA.

“In ICRA’s view, the trend in the performance relative to the pre-Covid quarter is the appropriate metric to gauge the strength of the recovery after the quelling of the second wave, which was accompanied by the sharp rise in vaccine coverage in India during Q2 FY2022,” she added.

Economic effects of vaccination

A fall in the number of Covid-19 cases resulting from an accelerated pace of vaccine administration boosted economic activity and demand for products and services in the country. Nearly all lockdown restrictions were gradually lifted by state and federal governments allowing total resumption of activities to pre-Covid levels by the start of July.

A rise in the number of coronavirus cases to a daily average of over 100,000 in April had triggered restrictions on mobility and transport to bare essentials which lasted till the end of April. Economic activity in the latest quarter was supported by a pick-up in industrial and service sector volumes after the second wave of Covid-19 subsided and rising vaccine coverage revived confidence.

“India recorded only 11% increase in cases during July-September which is the second-lowest among top 15 most affected countries. Further, the total Covid-19 active cases reached the lowest of 1.24 lakhs (124,000) since June 2020 and India’s cumulative Covid-19 vaccination coverage exceeded the 1.15 billion mark. With this, economic activity has gained momentum and reached pre-Covid levels,” said Soumya Kanti Ghosh, chief economic adviser to the State Bank of India.

Government spending and central bank support 

Increased government spending — federal and provincial, robust merchandise exports and sustained demand from the farm sector supported economic activity in the July-September quarter. The government and the Reserve Bank of India are together in efforts to accelerate the annual pace of economic growth which fell to the lowest level in 40 years in the year ended March 2021.

The government announced several billion dollars of production-linked incentives and more liberal foreign investment regulations to attract investors. On its part, the central bank held benchmark rates at record low levels and ensured abundant cash in the banking system.

The federal government’s non-interest revenue expenditure expanded by 15% on an on-year basis in the July-September period, compared to a decline of 7.3% in the previous three months. Also, expenditure of 22 states of the country’s 28 states expanded by 13.1% in the last quarter, 10.6% more than the three months before. 


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A pick-up in bank loans reflected the accelerated pace of economic activity. Indian banks’ non-food loans advanced 6.8% in the six months to 30 September of the financial year 2020-2021, compared to 5.1% in the same period a year before. 

According to Suman Chowdhury, chief analytical officer at Acuité Ratings & Research, the steady progress in vaccination and the improvement in consumer sentiments was supported by the relative resilience of the industrial sector, a gradual rebound in the services sector with improved mobility, buoyancy in exports and improved government capital expenditure. 

Sector growth indicators 

“Despite a relatively uneven monsoon cycle, we reckon the impact on agricultural output is likely to be limited. Rural consumption indicators such as two-wheeler sales continue to underperform, but we do not see that being a material drag on activity, said Rahul Bajoria, chief economist at Barclays.

“Mining, construction and electricity consumption will revert closer to their pre-Covid growth rates, while supply shortages and logistic bottlenecks are impacting manufacturing performance. Semiconductor shortages have hit output, especially in sectors such as auto and ancillaries, while freight charges and supplier delivery times remain elevated,” he added.

Some economists believe that the services sector continues to be impeded by selective opening up due to the challenges posed by social distancing. They noted that it was only after September that most state governments unhurriedly opened up these services.

“The major thrust is to come from industry with manufacturing, leading the way with growth of 9% followed by construction with 7.5%. While the low base effect has provided a sharp upward thrust, the shortage of semi-conductors in the auto sector has stifled growth to a large extent. Growth in services estimated at 7.7% needs to be interpreted with caution as it comes over a large negative growth of 11.4% last year,” said Madan Sabnavis, chief economist at CARE Ratings in Mumbai.

According to a gauge devised by CARE called the CARE Ratings’ Economics Meters (CEM), the indicator spiked in July at 8.25 and then was in the 6.5-7 band for the next three months. The CEM takes into consideration 14 economic indicators which includes manufacturing, tax collection, foreign trade, equity and debt issuance, power consumption, auto registrations and employment. 

Respondents Estimate (in %)
CARE Ratings8.3
Acuité Rating8.5


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