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India Q3 GDP growth at 0.4% – Mint

The Indian economy returned to growth in three months to December, with GDP expanding 0.4% after two consecutive quarters of contraction led by pandemic-induced disruptions, as per data from the National Statistical Office (NSO) on Friday.

Growing 0.4% last quarter, India ended a technical recession.

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The NSO revised GDP prints for June and September quarters to -24.4% and 7.3% respectively from earlier estimates of -23.9% and -7.5%. For FY21, NSO expects the GDP to contract 8% compared to an earlier projection of a decline of 7.7%, signalling weaker than expected rebound in the March quarter.

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The growth curve

While ICRA Ltd and HDFC Bank had expected a mild recovery in economic activity with projected GDP growth of 0.7% and 0.8% respectively for December quarter, IDFC Bank had expected a growth of 1.8%.

During the December quarter, manufacturing grew 1.6% while public expenditure contracted 1.5% which could have dragged down overall GDP growth. Contact services, including trade, hotel, communications shrunk 7.7% while construction bounced back to grow at 6.2% during the quarter.

Lower-than-expected GDP growth may force professional forecasters to revise their projections for FY22.

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Emerging market matrix

As of now, rating agency Moody’s has forecast a 13.7% economic growth for FY22 while the Reserve Bank of India and Economic Survey have more modest estimates of 10.5% and 11% respectively. The International Monetary Fund has forecast 11.5% GDP growth for FY22.

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