India’s economy grew by 20.1% in the June quarter of this fiscal as against the contraction of 24.4% during the same quarter last year.
This is the fastest and best-ever fiscal quarter number since the mid-1990s, up sharply from 1.6% in the previous quarter.
While agriculture and manufacturing sectors continued to contribute to the recovery, the highest rise was seen in construction.
Despite the severe second wave of covid -19 pandemic during the first quarter, the massive growth has made India the fastest-growing major economy across the globe.
But should we go gaga over this growth?
In the last full fiscal 2020-21, India’s GDP had contracted by 7.3%. The impact has not yet been wiped out completely.
The comparison between this year’s GDP and last year is being done on a low base, as the first quarter of the last fiscal had seen a nationwide lockdown resulting in a complete stoppage of all factories, businesses etc.
GDP of Rs 32.38 trillion is still lower than Rs. 35.66 trillion recorded in the first quarter of 2019-20 i.e. before covid-19. It indicates that India is yet to emerge from the covid induced slump.
However, the GDP data of the present quarter clearly shows the economic recovery. The stock market is also giving a standing ovation with sensex crossing 58K, the fastest-ever record high level.
With vaccination pace picking up, the economic activities have also picked up momentum. The production of coal, natural gas, fertilisers, steel, cement etc has increased considerably in July 2021.
Retail, auto, farm, construction and export sectors have also picked up since June. The healthy GST receipts also suggest recovery of economic activities.
However, private and government consumption numbers remained static. The need to give push to consumption cannot, therefore, be overemphasised.
Though smaller businesses have been badly hit, higher exports and imports will boost manufacturing activities.
The numbers of the upcoming quarter will certainly highlight a better picture of the state of Indian economy.