India’s gross domestic product rose 20.1% for the April-June quarter, mainly aided by a record contraction in the year-ago period and a rebound in consumer spending.
The economy had contracted 24.4% in the same quarter a year earlier after the government imposed a strict nationwide lockdown to curb the spread of Covid-19.
According to figures released by the Statistics Ministry, India’s gross domestic product during the quarter is estimated at 32.38 trillion rupees, as against 26.95 trillion rupees last year.
However, it is lower than the 35.7 trillion rupees reported in the same quarter in 2019-20.
The Reserve Bank of India had projected growth of 21.4% for the quarter and Kotak Mahindra Bank had expected a 21.7% increase in gross domestic product from last year.
The main growth drivers during this quarter were the construction sector (up 68.3%), followed by manufacturing (up 49.6%). Interestingly, trade, hotels, transport and communication services, which were impacted by the second wave of the pandemic, showed growth of 34.3%.
Meanwhile, the agriculture sector that had withstood the pandemic-induced slowdown grew 4.5% during the quarter.
The second wave had a much more severe impact than the first one, with daily new cases topping 400,000 and many states imposing localized lockdowns from late April to early June. But unlike last year’s nationwide lockdown, it had a lesser impact on the economy.
Gross domestic product had grown 1.6% in the January-March quarter, but for the fiscal year 2020-21, had contracted 7.3%. This was the first annual contraction after more than 40 years.
However, market experts now see steady growth in the coming months as sectors such as retail, automotive, farm output and exports have picked up since June.
Factory managers are seeing a surge in activity in July, reflecting a pick-up in new orders. Exports have been growing for the past eight months, signaling strong global demand. The government’s goods and services tax collection had also exceeded more than one trillion rupees in July, reflecting a revival of economic activity.
The central bank has forecast annual growth of 9.5% this fiscal year, but warned that the third wave of Covid-19 could upset the economy. The International Monetary Fund had also projected growth of 9.5%.