New Delhi: India’s Gross Domestic Product (GDP) is likely to grow at nearly 18.5 percent in the first quarter of the current financial year (2021-22), a State Bank of India (SBI) research report Ecowrap said on Tuesday.
Based on a ‘Nowcasting’ model, the forecasted GDP growth for Q1FY22 would be around 18.5 percent (with upward bias), the SBI report said.
Higher growth in the second quarter of 2022 (Q1FY22) is mainly due to a low base.
India’s top lender has developed the ‘Nowcasting Model’ with 41 high-frequency indicators associated with industrial activity, service activity, and the global economy.
The SBI report expects gross value added (GVA) to be at 15 percent 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 amortization) + employee cost) in Q1 FY22, it said.
The corporate GVA of 4,069 companies registered a growth of 28.4 percent in Q1FY22. However, this is lower than growth in Q4FY21, thereby corroborating the lower GDP estimate than what was thought earlier, the report said.
It is globally noted that lower mobility leads to lower GDP and higher mobility to higher GDP, but the response is asymmetric. 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 said.
The relationship between the two has become weaker as can be seen in Q1FY22 when mobility declined but GDP growth was high and positive. Higher year-on-year growth is mainly on account of the base effect, the report said.
Meanwhile, the business activity index based on ultrahigh-frequency indicators shows 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.
(VP)
