“The better-than-expected Growth print partly owes it to healthy corporate results in March quarter of FY21. We admit the situation is still in flux, and it is too nascent to gauge the true impact of the second wave on macro variables. We believe that the impact is unlikely to be of the same magnitude as last year. Clearly, factors such as better adapted firms and policy response, stable financial conditions and robust global growth spillovers create growth buffers back home. However, credible vaccine drive remains key. The faster the vaccine traction, the faster would be the delinking between mobility and virus proliferation,” said Madhavi Arora, Lead Economist, Emkay Global Financial Services.

“GDP registered a growth rate of 1.6 per cent in Q4FY21, supported mainly by government expenditure. Government final consumption expenditure (GFCE) registered a growth rate of 28 per cent whereas private final consumption expenditure registered a growth rate of 2.6 per cent. The impact of the second wave of the pandemic could be seen in the GDP figures for Q1FY22 as most of the states enforced lockdowns and other restrictions from April onwards,” said Deepthi Mathew, Economist at Geojit Financial Services.

Sectoral data shows the Indian economy was moving on the recovery path, with sectors such as construction, manufacturing, and financial services reporting growth. However, with the second wave wreaking havoc across the country in April and May, the recovery might have de-railed.

Gross Value Added (GVA) in the fourth quarter grew 3.7% in the January-March quarter, against 1% in the previous quarter and 3.7% in the same period last year.

Electricity, gas, water supply, and other utilities saw a growth of 9.1%, against 7.3% in the previous quarter.

The construction sector saw a growth of 14.5% in the fourth quarter at basic prices, helping the economic growth accelerate.

In the previous financial year, India’s Gross Value Added (GVA) came in at -6.2%.

In Q4, Agriculture grew 3.6% growth against 4.3% in the year-ago period.

Electricity and other utility services grew 1.9%, against 2.1% in the previous quarter.

Real GDP or GDP at Constant (2011-12) Prices in the year 2020-21 is now estimated to attain a level of Rs 135.13 lakh crore, as against the First Revised Estimate of GDP for the year 2019-20 of Rs 145.69 lakh crore, released on January 29, 2021. The growth in GDP during 2020-21 is estimated at (-) 7.3 percent as compared to 4.0 percent in 2019-20.

GDP at Constant (2011-12) Prices in Q4 of 2020-21 is estimated at ₹38.96 lakh crore, as against ₹38.33 lakh crore in Q4 of 2019-20, showing a growth of 1.6 percent.

In the January-March quarter, India’s GDP grew by 1.6%. For the full year 2020-21, the economy contracted 7.3%, hit by the covid-19 induced lockdowns.

In April, the cement sector grew 548.8% on-year basis, helped by a lower base. In the previous month, the same stood at 32.7%.

On-mont data shows that in April Eight Core Sectors saw a contraction of 15% from the previous month.

In the previous financial year, Eight Core sectors growth stood at a negative 6.5%.

April Eight Core Industries growth came in at 56.1% on-year basis. Eight Core Sectors had grown 11.4% in the month of March.

It is likely that the previously published CSO GDP growth for FY21 at –8% might see an upward revision once the numbers are released on 31 May’21. Based on quarterly GDP numbers in FY21 and full year FY21 GDP estimates, Q4GDP was projected to reveal a contraction of 1.1% . Based on SBI Nowcasting model the forecasted GDP growth for Q4 would be around 1.3% (with downward bias). We now expect GDP decline for the full year to be around -7.3%

The Employees Provident Fund Organisation (EPFO) has allowed its members to take a second non-refundable COVID-19 advance. This provision for special withdrawal to meet the financial need of members during the pandemic was introduced in March 2020 under Pradhan Mantri Garib Kalyan Yojana (PMGKY). And an amendment to this effect was made by the Ministry of Labour & Employment in Employees’ Provident Funds Scheme, 1952 by inserting therein sub-para (3) under paragraph 68L, through a notification in the Official Gazette, the Ministry of Labour and Employment said in a statement today.

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“We expect GDP growth to recover to 2.5% on-year in QE March, amid broad-based improvement across components. High-frequency indicators such as PMI, rail freight, power demand, GST collections and E-Way Bills all improved amid a better COVID-19 situation in the quarter,” Morgan Stanley said in a note last week. Morgan Stanley estimates a broad-based improvement in the services sector, while industry growth is expected to reflect a slight sequential slowdown.

The median forecast of 29 economists surveyed by Reuters pegs the economic growth in the January-march quarter to be 1%, up from 0.4% in the previous quarter.

BSE Sensex and Nifty 50 ended higher on Monday, led by a healthy buying in index heavyweights such as RIL, ICICI Bank, Bharti Airtel and HDFC Bank. The 30-share Sensex surged to an over 3-month high and ended at 51,937. During intraday, the index zoomed 590 points and hit a high of 52,013. Nifty 50 clocked a record peak of 15,606 in the intra-day session. It, however, pared some gains and settled at 15,582.80. Market breadth was positive as 1,744 stocks advanced while 1,492 declined. A total of 191 shares remained unchanged. The broader market was also positive. S&P BSE Midcap index gained 0.45 per cent or 96 points to end at 21,758, while S&P BSE Smallcap index ended at 23,474, up 0.5 per cent or 117 points.

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“With a widespread recovery in volumes benefitting from the low base of the onset of the nationwide lockdown in March 2020, we project the growth of the GVA at basic prices to have improved to 3.0% in Q4 FY2021. Moreover, we peg the GDP growth for the just-concluded quarter at 2.0%, suggesting that the double-dip recession implied for Q4 FY2021 by the NSO’s 2 nd Advance Estimates for FY2021, was averted,’ said Aditi Nayar, Chief Economist, ICRA.

Financial services sector could grow 6%. “Financial sector remained relatively resilient throughout the pandemic. We expect steady growth in the sector.”

Public administration may grow at 7%. “Removal of spending caps for various departments and resultant expenditure by various departments likely helped to increase public expenditure.”

Net taxes minus subsidies to contract 9%. “Indirect tax collections registered record highs in Q1 21. Fiscal transfers likely to continue to result in distortions in tax data.”

~ Barclay’s

Electricity, Gas and Water to grow 7.5%. “Demand for public utilities improved, in line with the continued normalization in activity.”

Construction expected to grow 8%. “Strong increase in construction activity likely drove demand for steel and cement, but high input costs likely to have some effect.”

Trade and commerce to expand 1.5%. “Low base and strong sequential gains in consumer mobility and demand helped to boost activity.”

~ Barclay’s

Agriculture expected to grow at 3% rate. “Farm output is on course for a strong end to the rabi (winter) crop season.”

Mining and quarrying to contract 4%. “Industrial output data showed that mining output remains a drag, with activity still contracting amid high inventories and rising prices.”

Manufacturing to grow 8%. “Strong improvement in manufacturing output likely to boost growth to a high of 8% y/y. Low base and sharp sequential gains drove the gains.”

~ Barclay’s

In a statement after the MPC in April, RBI Governor Shaktikanta Das had said the recent surge in COVID-19 infections adds uncertainty to the domestic growth outlook amidst the tightening of restrictions by some state governments. The RBI said that though the firms engaged in manufacturing, services and infrastructure sectors were optimistic about a pick-up in demand, “consumer confidence, on the other hand, has dipped with the recent surge in COVID infections in some states imparting uncertainty to the outlook.”

The Reserve Bank of India had retained the economic growth projection for the current financial year at 10.5 per cent, while cautioning that the recent surge in COVID-19 infections has created uncertainty over the economic growth recovery.

Based on the fourth-quarter growth estimates, SBI has pegged the full-year GDP contraction to be 7.3%, down from the earlier predicted 7.4%. In the Financial Year 2019-2020, GDP growth came in at 4.2%. SBI’s estimates are modest than those pegged by the NSO and the Reserve Bank of India. While NSO believes full-year contraction to be 8%, the RBI estimated it to be 7.5%.

“The concern now is that the infections are spreading to the interiors too in most states which also means that agriculture, which was isolated from the first wave, can be affected this time though there is not a perceptible impact presently,” domestic rating agency, CARE Ratings said earlier this month. With state lockdowns still in place and businesses taking a hit, CARE Ratings has trimmed its GDP growth forecast for the financial year 2021-22 to 9.2% with a downward bias as against 10.2% projected in April.

Just days after the GDP data release, the Reserve Bank of India’s Monetary Policy Committee (MPC) will meet for its bi-monthly meeting. The MPC has committed to keeping rates favourable to support strong economic growth.

The biggest hit from the second wave of Covid infections has been to demand, with a loss of mobility, discretionary spending and employment, the Reserve Bank of India said earlier this month. The central bank, which will review interest rates later this week, has kept monetary policy loose and injected liquidity into the system to support growth.

Still, the extent of economic shock appears to be greater than we previously estimated, as the tightening of restrictions across several states appears to have increased the economic cost. Indeed, with over 98% of India’s GDP currently under some form of mobility restrictions, we believe the economic hit might turn out to be slightly higher than we had previously estimated. High-frequency data, including fuel consumption, electricity consumption, GST e-waybills, and mobility indicators, all suggest that activity has retreated back to May-June 2020 levels when severe restrictions were still in place and economic losses were quite high.

~ Barclay’s

The Indian economy’s resilience will be tested by its ability to overcome a devastating outbreak of Covid-19, although no one’s yet doubting its potential to pull off the world’s fastest pace of growth among major economies this year. The economy is on track to grow 10% in the year that began April 1, according to the median of 12 estimates compiled by Bloomberg News. That’s after several economists downgraded their forecasts in recent weeks to factor in local curbs on activity, including in India’s political and commercial hubs.

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Barclay’s Rahul Bajoria believes that the resurgent COVID-19 wave took the wind out of an economic recovery that was gathering momentum. “We expect the economy to have expanded by 3.5% on-year in Q4 FY21, as a low base and strong sequential gains helped propel GDP growth to a five-quarter high,” he said. Rahul Bajoria added that the agriculture sector is likely to have remained resilient, as large wholesale market arrivals and high purchases of harvested crops by the government point to a strong rabi harvesting season.

Dalal Street jump from lows on Monday to end with gains. Sensex and Nifty each closed the day 1% higher. Nifty managed to set another all-time high during the day.

Corporate India’s business confidence sharply deteriorated due to the devastating second COVID-19 wave, with nearly three-fourths of the participants reporting weak demand conditions, according to a leading industry group’s latest survey. The steep drop from a decade high reading in the previous round follows a record surge in infections in April and May, which has seen many states reintroduce limited lockdowns and multiple brokerages cutting economic growth expectations.

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SBI’s Chief Economic Advisor Soumya Kanti Ghosh said that corporate results have reinforced the fact that Q4 growth would be much better than Q3 growth. “The corporate GVA of 625 companies has expanded by 62.04% in Q4 as compared to 12.98% growth in Q3 (of 4164 companies ),” he highlighted.

India’s economic growth is likely to have continued expanding in the fiscal fourth quarter of the last year 2020-21, with economists predicting a 1.3-3.5% on-year GDP growth in January-March. However, economists continue to expect a contraction for the full financial year 2020-21, owing to the severe lockdown seen in the initial quarters. The Central Statistics Office (CSO) will later today reveal how the Indian economy performed during the January-March quarter and the pandemic-struck full financial year. India’s GDP grew 0.4% in the October-December quarter of FY 2020-21.

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