Q2 GDP: Indian financial system to proceed on restoration mode, say consultants, India Inc


NEW DELHI: With India’s GDP clocking a decrease contraction of seven.5 per cent within the September quarter, business and consultants expressed confidence of additional restoration within the coming months and stated the federal government’s actions are bearing fruit.
In a tweet, Vedanta chairman Anil Agarwal stated, “Q2 #GDP numbers present that financial system is recovering. Authorities’s efforts on stimulus and reform are displaying outcomes. Hopefully, we may have constructive development in H2 FY21 and double digit development in FY22.”

CII director normal Chandrajit Banerjee stated “the sharp rebound within the second quarter GDP print to -7.5 per cent as in comparison with the massive unprecedented -23.5 per cent decline seen within the earlier quarter will increase confidence that with the easing of lockdown restrictions over the previous few months, there was a discernible enchancment within the financial system.”
He noticed that the federal government motion by way of opening the financial system has clearly been helpful for development.
“We’re sure this pattern would proceed and the figures for the third quarter could be reflective of that. Although non-public consumption gave the impression to be weak in Q2, all anecdotal proof level in direction of a stronger consumption state of affairs within the subsequent quarter.
“A rise in authorities spending would assist this momentum for a extra sturdy development within the coming months,” stated Banerjee.
FICCI president Sangita Reddy stated the GDP print has are available as a nice shock.
“That is significantly better than what was anticipated by most analysts and clearly displays that the Indian financial system is on a pointy restoration mode. The constructive, albeit marginal, development famous within the manufacturing sector within the second quarter is really encouraging,” she added.
India’s financial system recovered quicker than anticipated within the September quarter as a pick-up in manufacturing helped GDP clock a decrease contraction of seven.5 per cent.
The gross home product (GDP) had contracted by a report 23.9 per cent within the first quarter of the 2020-21 fiscal (April 2020 to March 2021) because the coronavirus lockdown pummelled financial exercise.
Manufacturing posted a shock 0.6 per cent development in July-September after it had shrunk by a large 39 per cent within the previous quarter.
The GDP contraction of seven.5 per cent in July-September compares with a development of 4.Four per cent in the identical quarter final yr.
Assocham secretary Basic Deepak Sood stated a decisive arrest of the slide from a steep contraction within the first quarter clearly reveals a sharper restoration in India’s financial system which is braving the COVID-19 pandemic with robust resilience.
“Earlier estimates had apprehended round 10 per cent drop in Q2. The slide has been narrowed to 7.5 per cent, a state of affairs significantly better than anticipated. Going ahead, the second half of the present monetary yr ought to give us surprises on the constructive facet,” Sood stated.
He stated a number of key excessive frequency indicators level in direction of additional enchancment, with the agricultural financial system main the rebound at the same time as city consumption is returning to form.
PHDCCI president Sanjay Aggarwal stated significant reforms undertaken the by the federal government since March 2020 have given the course to the financial system to come back again on observe.
Going forward, the federal government’s deal with demand-rejuvenating measures launched underneath Aatmanirbhar Bharat 3.Zero may have a multiplier impact on the financial development trajectory by enhanced demand, job creation, elevated non-public investments, escalated exports and development of sectors which have robust back and forth linkages, he added.
Mayur Dwivedi, head- technique, M&A, Buyers Relations, Religare Enterprises, stated the GDP knowledge for July-September quarter is best than expectation with each manufacturing and agriculture supporting development revival.
“It now stays to be seen whether or not this momentum is sustained within the remaining two quarters of FY21. We count on RBI to stay dovish and usher in a minimum of another charge minimize of 25 bps within the close to future,” he added.
Rumki Majumdar, economist at Deloitte India, stated the contraction within the first two quarters of this fiscal yr is not any shock.
“For the reason that quarterly knowledge of GDP is launched with a lag of two months, we must always take a look at these numbers within the rear-view mirror maintaining in perspective that latest high-frequency knowledge probably counsel a faster rebound forward,” Majumdar added.
B Gopkumar, MD and CEO, Axis Securities, stated the expansion outlook has improved with the Q2 GDP print, and now the market will search for sustainability of demand, particularly after the festive season.
Sanjay Kumar, CEO and MD, Elior India, stated the contraction in India GDP at (-) 7.5 per cent is amongst the worst as in comparison with its Asian friends. That is undoubtedly a reason for concern and hopefully, with the easing of the financial coverage, we will count on some additional rebound within the coming quarter, he added.
“Going ahead, nonetheless, we imagine that the revival momentum in Q3/This fall might be critically depending on the pickup in non-public consumption in the course of the festive season and a discount within the depth of the COVID pandemic.
“Any additional resurgence of the pandemic and the delay within the introduction of the vaccines might constrain the anticipated GDP development in Q3/This fall,” stated Suman Chowdhury, chief analytical officer, Acuite Scores & Analysis.
China’s financial system grew by 4.9 per cent in July-September this yr, quicker than the three.2 per cent development in April-June 2020.
Although the contraction in July-September pushed India into its first technical recession, based mostly on information going again to 1996, a pointy restoration held out hopes for the financial system turning round earlier than the top of the fiscal yr.

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