Pandemic shadow prolongs on economy as central scales down full-year growth estimates
India’s gross domestic product (GDP) grew 5.4 per cent in the third quarter (Q3) of 2021-22, way less than the 8.4 per cent growth for the preceding three months. Also, the GDP for the whole year (ending March 31, 2022) is now expected to grow 8.9 per cent — and not 9.2 per cent as expected earlier — according to the Second Advance Estimates of National Income for the year released by the Union government February 28.
The declined growth rate for October-December 2021 was on the back of an already low 0.5 per cent uptick in the economy in the year-ago period.
At a sectoral level, the construction industry performed the worst by shrinking 2.8 per cent for the three months ending December. Manufacturing was stagnant (up 0.2 per cent). Here’s what the other categories notched up:
Agriculture added the most gross value (Rs 6,63,037 crore) after the financial and related services industry, continuing the stellar role it has played in an otherwise unstable phase.
The bump from public administration and others (Rs 5,08,670 crore, up from Rs 4,35,528 crore a year ago) may indicate government spending to boost the economy.
The third quarter — the last three months of a calendar year — are typically months when festivals ranging from Durga Puja and Diwali to Christmas and New Year are expected to spur economic activities. Many businesses, both large and small, await the period as it generally bumps up their topline. Families spend on essentials as well as big-ticket buys; many recieve bonus payments and much of that liquidity is cycled back into the economy.
The disappointing data put a question mark on the narrative that the Indian economy was back on track after the COVID-19-induced derailment. The 8.4 per cent growth in July-September 2021 was on the back of a 7.4 per cent contraction in the same period in 2020. Lockdowns — countrywide and regional — have thrown many out of jobs, forced enterprises to shutter down and siphoned off liquidity. All this were expected to curb purchasing power and economists have been arguing for more government spending.
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