India: NSO projects 9.2% y/y GDP growth in FY22

  • India’s economy is expected to grow 9.2% in FY22, aided by the base effect of 7.3% contraction in FY21, according to the first advance estimates by the National Statistical Office (NSO).
  • The strong growth will lift real gross domestic product (GDP) 1.3% over the pre-Covid levels of FY20, but the underlying data showed consumer stress and weakness in the contact-intensive services sector.
  • The estimated growth is below the Reserve Bank of India’s pre-third wave projection of 9.5% in Dec 21.
  • The nominal gross domestic product (GDP) is forecast to rise 17.6% in the year against the budget estimate of 14.4% for the current year, underscoring high inflation. Gross value added (GVA) is projected to grow 8.6% compared with a contraction of 6.2% in FY21.
  • Economists see a downward bias to the growth estimates, as the data may not fully capture the impact of the ongoing third wave, a possibility acknowledged by the statistics office. The estimates are likely to undergo revisions as more data become available, the statistics office said, adding that these are early estimates.
  • The growth in FY22 is driven largely by government capital spending. It’s seen increasing 7.6% while gross fixed capital formation, a measure of investment, is estimated to rise almost 15% in FY22.
  • The share of private consumption in GDP is expected to moderate further to 54.8% in FY22 from 56% in FY21 and 57.1% in FY20.
  • Agriculture is estimated to expand 3.9% in FY22 compared with 3.6% in FY21 while manufacturing growth is pegged at 12.5% against a contraction of 7.2% last fiscal.
  • Construction is expected to grow 10.7% against an 8.6% contraction in FY21. Financial, real estate and professional services, as a group, is seen growing 4% compared with a 1.5% contraction in FY21.

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