The domestic rating agency ICRA has raised India’s GDP growth forecast for the second quarter (Q2) of FY2021-22 to 7.9 per cent as there is increase in government spending in September, according to a release.
A normalising base is expected to lead to a moderation in the growth when compared with the year-ago period, the agency said. However, earlier it had estimated real GDP growth for the July-September period at 7.7 per cent. While, The RBI has forecast a 9.5 per cent growth rate in FY22.
“Economic activity in Q2 FY22 was supported by a pick-up in industrial and service sector volumes after the second wave of Covid-19 subsided and rising vaccine coverage revived confidence. Additionally, healthy Central and state Government spending, robust merchandise exports and continuing demand from the farm sector supported economic activity in that quarter,” its chief economist Aditi Nayar said.
The central government’s non-interest revenue expenditure expanded by 15 per cent in Q2FY22, compared to the contraction of 7.3 per cent in Q1FY22. Additionally, for the 22 state governments for which data is available, revenue expenditure expanded by 13.1 per cent in Q2FY22, a step up from the 10.6 per cent growth in Q1FY22.
Further, the agency has estimated growth by gross value added basis for the industry, services and agriculture, forestry and fishing to come at 8.5 per cent, 7.9 per cent and 3.0 per cent, respectively, for the quarter.