Concerns remain as GDP data only an economy snapshot before COVID-19 second wave struck

Even when the subsequent quarter is healthier, consultants really feel, there’ll arguably be sufficient catching as much as do and misplaced floor to be lined. (Representational picture)

The a lot awaited knowledge from the Nationwide Statistical Workplace on India’s Gross Home Product (GDP) numbers for the January to March quarter and for the 12 months as a complete, has been higher than the expectations. However then, there are considerations.

The financial system grew by 1.6 per cent within the quarter and although the 12 months noticed an total contraction of seven.3 per cent many consultants have been fearing worse and have been subsequently considerably relieved. “The sooner expectation was that the financial system will shrink much more,” says Mahesh Vyas, managing director and CEO of the Centre for Monitoring Indian Financial system (CMIE), a number one analysis agency and an unbiased suppose tank. For, as he factors out, “all of us started the 12 months 2020-21 with the expectation of 10 to 11 per cent contraction within the GDP numbers and the truth that we concluded the 12 months with a contraction of seven.3 per cent means it turned out higher than what was initially feared.”

Although, he says, the quick frequency indicators (like electrical energy consumption, railway freight motion, car manufacturing) did point out that the final quarter (This autumn) would do higher and this did contribute to some current scaled up expectations about how the quarter would carry out.

The large query now’s the coping up with the aftermath of the second wave of Covid-19 that was exhibiting some upticks round February this 12 months however then hit the nation severely thereafter with the month of April proving to be the cruelest when it comes to caseload and loss of life. Although at an combination stage the height is behind us, the problem will likely be to see how the financial system thus walloped will emerge from the present quarter. Even when the subsequent quarter is healthier, consultants really feel, there’ll arguably be sufficient catching as much as do and misplaced floor to be lined.

“The problem actually is the present quarter and the way this 12 months pans out,” says Vyas. What is going to subsequently must be watched will likely be consumption and demand as a result of jobs and incomes have been hit.

Infact, one among professors who has been finding out India for a very long time says, the GDP numbers additionally replicate components of the underlying strengths of the financial system, which maybe has extra to do with the enterprise drivers than policy-push. The GDP numbers until March present that these have been fairly sturdy and is obvious from a number of the main monetary establishments like a few of India’s prime banks recording file income. The State Bank of India for example, registered a internet revenue of Rs. 6,451 crore in Q4FY21 as in comparison with Rs.3,581 crore in Q4FY20, a rise of 80.15 per cent year-on-year. Or within the case of a number one non-public sector financial institution – ICICI Bank for instance, seeing its revenue after tax rising by 104 per cent year-on-year to 16,193 crore (US$ 2.2 billion) in FY2021 in comparison with 7,931 crore (US$ 1.1 billion) within the 12 months ended March 31, 2020 (FY2020). HDFC Bank and different main gamers additionally posted improved monetary efficiency. How this and the remainder of the momentum within the financial system sustains will now apparently be watched carefully.