Q2 GDP: Signs of durability amiss as momentum wanes after festive season

While rising vaccine coverage and fuel tax cuts will boost confidence and re-invigorate demand, the spectre of higher prices may contain the consumption recovery in H2FY22

India’s real GDP expanded by a higher-than-expected 8.4 per cent in year-on-year (YoY) terms in Q2FY22. With this, the absolute level of GDP reverted mildly above the pre-Covid level of Q2FY20, which should be a cause for celebration.

Sorely, the disaggregated data for Q2 FY2022 does not offer signs that the recovery had gained a durable momentum. Private and government consumption expenditure in Q2FY22 lagged their pre-Covid level by 4 per cent and 17 per cent, respectively. The impact of this was offset by a dizzyingly sharp rise in valuables relative to the pre-Covid level of Q2FY20, led by the