Why GDP expansion by 20.1% in Q1 of FY22 is misleading

Distorted base of last year's stringent nationwide lockdown obscured devastation of second wave of Covid-19 that came with staggered state-wise curbs in Q1 of current fiscal

India’s real GDP expanded by a record-high 20.1 per cent in year-on-year (YoY) terms in Q1 FY2022, in line with our own forecast of 20.0 per cent. As anticipated, the distorted base of last year's stringent nationwide lockdown obscured the devastation of the second wave of Covid-19 that was accompanied by staggered state-wise restrictions in Q1 FY2022.

Nevertheless, the sharp YoY expansion in that quarter is analytically misleading, as the real GDP in Q1 FY2022 not only posted a sequential slowdown of 16.9 per cent over Q4 FY2021, but also trailed the pre-Covid level of Q1 FY2020 by a considerable