The rating agency Icra stated on Wednesday that economic growth for the first quarter of the current fiscal year, which is due out this month, maybe underestimated at 20%. It warned that during the first quarter of the current fiscal year, the organized sector is likely to have benefited at the expense of the less formal area. According to the report, existing data are frequently inadequate to represent the latter’s agony.
“The consumer confidence survey conducted by the RBI serves as a useful proxy for demand from the less formal sectors. It’s July 2021 round indicated that the Current Situation Index barely rose to 48.6 from a record low of 48.5 in the May 2021 round, highlighting the continued impact of the loss of income and employment, as well as higher medical expenses experienced by many households as a result of the second wave of Covid-19,” Icra chief economist Aditi Nayar said.
Icra forecasts a 17 percent year-on-year (YoY) increase in gross value added (GVA) in Q1FY22, owing to solid Central and state government capital investment, robust goods exports, and resilient agriculture sector demand. Regardless, the dampened foundation of last year’s countrywide shutdown has assisted in masking the impact of Covid-19’s second wave.
“Based on our assessment of volumes and available earnings, we have forecasted a significant 37.5 percent increase in GVA in the industry in Q1FY22, led by construction and manufacturing, which experienced significantly fewer curbs in the just-concluded quarter compared to the situation during last year’s stringent nationwide lockdown,” Nayar said. Construction activity, in particular, benefited from robust Central and state government Capex investment in Q1FY22, which topped even pre-Covid levels in Q1FY20.”
(News- Business Standard)