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Published on 22/10/2021 10:06:27 AM | Source: Accord Fintech

Icra Rating projects India’s Q2 GDP at 7.7% with recovery widening

Posted in Economy News| #India #Economy #ICRA #GDP #Quarterly Result

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Icra Rating has said that the economy finally looks nearly out of the pandemic woods, helping the Q2 GDP print at 7.7 per cent, with half of the 15 high-frequency indicators recovering to the pre-pandemic levels in the second quarter. However, the September print was not as good as the quarter, indicating that the recovery remains uneven. Icra Rating chief economist Aditi Nayar said while continued base normalisation, emerging supply-side constraints and excess rainfall have dampened the year-on performance of most of the 15 high-frequency indicators in September, the economic recovery has widened in Q2 as the crisis wrought by the second wave has abated, with a larger number of sectors bettering their pre-pandemic performance, relative to Q1.

The annualised performance of 14 of the 15 high-frequency indicators, except non-food bank credit, have worsened in September compared to August. Accordingly, Nayar projects real GDP in Q2 to have mildly trailed the level of Q2 of FY2020, at 7.7 per cent, compared to 2.21 per cent in Q1, led by the continued subdued performance of the contact-intensive sectors. She also expects the daily average generation of the GST e-way bills in October to surpass the peaks seen in February-March 2021, indicating a better print of the growth numbers in the second half of the current fiscal. Despite the widened recovery in Q2 with a larger number of sectors bettering their pre-pandemic performance, Nayar said the revival is multi-speed, with a considerable variation in the pace of growth across sectors.

There is also the growing evidence of a K-shaped recovery, as is evidenced by the sharp disparity in the performance of the stock markets, robust growth in direct tax collections and improved business sentiment, juxtaposed with the continued pessimism displayed by urban households in the RBI's latest consumer confidence survey. The low performance in September was mainly on account of a combination of factors such as continued base normalisation (especially for motorcycles and scooters, domestic airline passenger traffic, and generation of GST e-way bills), supply-side constraints (non-availability of semi-conductors particularly for passenger vehicles) and excess rainfall.