India's GDP expected to grow at 22-23% in June quarter: Acuite Rating

India's economy is expected to grow 22-23 per cent on year-on-year (Y-o-Y) in the June 2021 quarter (Q1FY22) on the back of a severe contraction a year ago, government capex and exports, according to Acuite Ratings.

A double-digit sequential contraction in Gross Value Added (GVA) and Gross Domestic Product (GDP) is also expected vis-à-vis Q4FY21, given the severe hit impact on the services sector.

Suman Chowdhury, chief analytical officer, Acuité ratings & Research, said Q1FY22 enjoys strong support from a favourable base from last year’s near-complete nationwide lockdown. It had led to a massive 24.4 per cent (YoY ) contraction in Q1FY21 GDP of India.

The intensity of the second wave of Coronavirus (Covid-19) and the subsequent lockdowns across almost all states disrupted the contact intensive services again in Q1. But, the growth print is likely to be supported by the relative resilience of the industrial sector, steady uptick in exports and improved government capital expenditure levels apart from the base factor.

A lower impact of the lockdowns on the industrial sector is manifested in the Index of Industrial Production (IIP) print for Q1 which recorded 44.9 per cent YoY growth. The buoyancy in the export sector is reflected not only by the 86 per cent YoY growth, but also an 18 per cent growth over that in Q1FY20.

The agency said it has projected a GVA YoY growth of nearly 20.0%. However, the absolute levels of output will still be lower compared to the pre-Covid levels - first quarter of FY20. This implies that the economy still needs to cover some lost ground before embarking on a sustainable growth path.