By BW CFO World Online Bureau
India’s GDP is expected to increase at 18.5% in the first quarter because of a low starting point. When mobility falls the GDP growth falls but vice versa cannot be held true.
According to the latest SBI Research Report Ecowrap, India’s gross domestic product (GDP) is forecasted to expand at about 18.5% in the first quarter of this fiscal year, lower than what RBI had expected which was at 21.4%.
The report stated, “the expected GDP growth for Q1 FY22 would be around 18.5% (with an upward trend) based on the ‘Nowcasting’ model.” The upward trend in the second quarter of 2022, or Q1 FY22, is mostly because of a low starting point.
As per the study, gross value added (GVA) is anticipated to hit 15% in Q1FY22. As stated by the first corporate statistics, corporate GVA EBIDTA (earnings before interest, taxes, depreciation, and amortisation) + employee cost) recovered remarkably in Q1 FY22.
The ‘Nowcasting Model,’ entrenched by the State Bank of India, throws light on 41 high-frequency variables appertained to industrial activity, service activity, and the world economy.
In Q1 FY22, 4069 businesses reported an increase of 28.4% in their corporate GVAs. However, the growth in Q4 FY21 was greater than this, confirming the GDP was lower than it was previously assumed.
It further added that, when mobility falls, results in a fall in economic activity and therefore a decline in GDP growth; but, as mobility improves, GDP growth does not increase in the same proportion respectively.
“The connection between the two has loosened, as displayed by the fall in mobility in Q1 FY22, although GDP growth remains strong and favourable. However, according to the research, the increased y-o-y growth is primarily due to the base effect”, said the report
Meanwhile, the business activity index based on ultrahigh-frequency indicators swell in August 2021, with the most recent value of 103.3 for the week ended August 16, 2021.
In Q2 FY22, RTO (regional transport office) collection, electricity consumption, and mobility indices all improved, indicating an upscale trend in economic activity moving forward.