India Registers Strong GDP Growth Attributable To A Favourable Base. EXIM Expands.
- The YoY growth registered in GDP can be attributed largely to a lower base effect where the whole Indian economy had come to a standstill same time, last year.
- However, the absolute GDP metrics points towards the fragmented and partial recovery in economic activities.
- Private final consumption expenditure went up by 19.3% Y-o-Y but declined sequentially by 17% to INR 17.7 lakh crore.
- Perhaps prematurely, the government decided to cut back on expenses as the economy begins to regain composure.
- While exports and imports both expanded for the month, a higher import bill can be attributed to petroleum and gold purchases. The same reflects in a widened trade deficit situation.
Aggregate GVA Is Looking Up; Most Can Be Owed To Turnaround In Select Activities
- On a YoY basis, the growth is pretty much understandable. However, the strength of the growth trajectory since Q2FY21 is notable.
- Drawing upon reported absolute numbers, electricity, gas, water supply and other utilities along with construction services staged the largest turnaround in its contribution to aggregate GVA.
- While economic activities are evidently improving, the pace of improvement will be critical. The pace is directly related to the pace of vaccine administration and consequent ramp up in mobility.
The First Five Months Of The Fiscal Recorded Healthy Accounts For The Administration
The government’s total receipts for the first five months of this fiscal stand at INR.8.1 trillion, almost 2x of last year’s level, while registering a growth of 14% CAGR compared to receipts of the first five months FY20.
The revival in revenues and almost flat expenditure for the first five months of the fiscal year lends appreciable headroom for the government to take up much-needed capital expenditures during the rest of the fiscal year.
FY22, thus, could be an exceptional year in which the government manages to over-achieve its fiscal deficit target by a significant margin and end the year with higher-than-targeted spending.
