India Q2 GDP Data (2021-22)

Ministry of Statistics and Programme Implementation (MoSPI) has released the GDP data for the second quarter (July, August and September) of the current financial year (2021-22).

What does the data say?

• Gross Domestic Product (GDP) – India’s GDP which measures economic activity from the demand side was 8.4% more than it was in the same quarter last year.
• Gross Value Added (GVA) – India’s GVA which measures economic activity from the supply side was 8.5% more than it was in the same quarter last year.
• The Indian economy clocked a healthy growth rate of 8.4 % in Q2 of FY 2021-22 due to increased vaccination and an uptick in agriculture, public administration and defence services sectors.
• High frequency indicators – All high-frequency indicators such as industrial production, vehicle sales, exports, port cargo and rail freight traffic, and GST e-way bills point to the economy growing faster in the second quarter.
• Gross Fixed Capital Formation (GFCF) – GFCF shows 1.5 % rise over July-September in the pre-pandemic year 2019-20.

Key takeaways from GDP data:

Takeaways from GVA data: 

• GVA in better all sectors than it was in Q2 of last year except four key sectors that play a great part in creating fresh jobs: Mining & Quarrying, Construction, Services such as trade, hotels and financial services.
• Lower GVA levels would imply lower incomes for those employed in these sectors as well as lower employment opportunities in them.
• The manufacturing sector posted a growth of 5.5 % and the construction sector grew by 7.5 % in July-September than the same period last year.
• Agricultural growth increased to 4.5 % in the July-September quarter, while electricity, gas, water supply, and other utility services grew 8.9 % than the last year.
• In the services sector, the trade, hotels, transport sector grew at 8.2% in July-September as against a sharp 16.1 % contraction last year.

What are the policy implications?

• Although the economy is recovering from the recession it went into in Q2 of 2020, two data points put the recovery in perspective.
• India’s recovery is still emerging and a V-shaped recovery would have required the Q2 GDP and GVA to be much higher. So, it may take another two years to cross those levels.
• The GVA and GDP are around 3.5% and 4.5% respectively, in the first half of the FY 2021-22, which is lower than the first half-year of 2019.