India’s GDP likely to grow at 18.5% in April-June quarter this fiscal: SBI report
India’s gross domestic product (GDP) is expected to grow at around 18.5% in the first quarter of the current financial year, SBI noted in its research report Ecowrap, lower than the RBI’s 21.4% projection.
“Based on our ‘Nowcasting’ model, the forecasted GDP growth for Q1 FY22 would be around 18.5% (with upward bias),” the report said.
Higher growth in the second quarter of 2022, or Q1 FY22 is mainly on account of a low base.
The report expects gross value added (GVA) to be at 15% in Q1FY22.
The corporate results announced so far indicate that there is a substantial recovery in corporate GVA EBIDTA (earnings before interest, taxes, depreciation, and amortisation) + employee cost) in Q1 FY22, it said.
State Bank of India has developed the ‘Nowcasting Model’ with 41 high-frequency indicators associated with industrial activity, service activity, and the global economy.
The corporate GVA of 4,069 companies registered a growth of 28.4% in Q1 FY22. However, this is lower than growth in Q4 FY21, thereby corroborating the lower GDP estimate than what was thought earlier, the report stated.
With the decline in mobility, the economic activity declines and thus GDP growth, however, with an increase in mobility the GDP growth does not increase in the same proportion, it added.
“The relationship between the two has become weaker as can be seen in Q1 FY22 when mobility has declined, however, GDP growth is high and positive. But higher y-o-y growth is mainly on account of the base effect,” the report said.
Meanwhile, the business activity index based on ultrahigh-frequency indicators show a further increase in August 2021, with the latest reading for the week ended August 16, 2021, at 103.3, it added.
RTO (regional transport office) collection, electricity consumption along with mobility indicators have revived in Q2 FY22, indicating positive momentum in economic activity going forward, the report said.
