India's real GDP growth to be 20% YoY in Q1 FY22: Motilal Oswal

10 Aug '21

2 min read

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India's real gross domestic product (GDP) is expected to grow by 20 per cent on a year-on-year (YoY) basis in the first quarter of this fiscal, according to Motilal Oswal Financial Services (MOFS), which recently said in a report that the ‘economic activity index' (EAI) for India's real gross valued added (GVA) grew by 11.6 per cent YoY in June after growing by 22.8 per cent YoY in May.

“It implies EAI-GVA growth of 22.6 per cent YoY in Q1 FY22, following a contraction of 14.4 per cent YoY in Q1 FY21. A low base led to higher double-digit growth in the non-farm sector, while farm activity grew 6.6 per cent in the quarter," MOFS' EcoScope report said.

"The estimates suggest that India's real GDP growth was 20 per cent YoY in 1QFY22, which is in line with our expectations," it asserted.

Notwithstanding the double-digit growth in Q1 in this fiscal, the real GDP growth would slow towards 5-7 per cent in the remaining quarters.

"The way EAI-GVA, EAI-GDP was also supported largely by a low base. Although EAI-GDP grew by a modest 3.6 per cent YoY in June as against 11.6 per cent YoY in May, it increased by 23 per cent YoY in Q1 FY22 as against a contraction of 21.2 per cent YoY in Q1 FY21,” it said.

"While private consumption grew by 18 per cent YoY in Q1 FY22, government revenue spending contracted in real terms in the quarter. Preliminary estimates indicate India's EAI for GVA posted lower double-digit growth of 11.6 per cent YoY in June, after growing 22.8 per cent YoY in May," the report said.

The data for July indicated a recovery. "India Manufacturing PMI picked up strongly, merchandise exports were at a record high," it added.

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