If the 9.2% growth is realised it would be the fastest growth since 1988-89 when the economy expanded by 9.6%. Under the new methodology, data for which is available for 17 years it would be the fastest expansion.
The nominal GDP (including inflation) is estimated at 17.6%. The size of the economy based on current prices in dollar terms is estimated to be $3.1 trillion.
Accordingly to the World Bank, India’s GPD in current dollar terms had risen to $2.9 trillion in 2019 before falling to $2.7 trillion in 2020 due to Covid’s impact.
This growth rate would also help it retain the fastest growing major economy tag in the world. The economy has recovered after the bruising impact of the strictest lockdown imposed to prevent the spread of the coronavirus led to a record 24.4% contraction in the June quarter of 2020-21.
The National Statistics Office’s (NSO) GDP estimates are marginally lower than the Reserve Bank of India (RBI) which had projected the economy to grow by 9.5%. The International Monetary Fund (IMF) also expects it to expand on similar lines.
But the third wave of the pandemic led by the Omicron variant has cast a shadow on growth and strength of the recovery.
Several economists have pared their GDP growth estimates for the full year and expect the curbs being unveiled by states to have an impact on businesses and growth in the months ahead.
The NSO also cautioned that the 9.2% GDP growth estimate in the first advance estimates does not take into account a number of factors and impact of government measures could lead to revisions.
“However, these are early projections for 2021-22. Actual performance of various indicators, actual tax collections and expenditure incurred on subsidies in the following months, fresh relief measures for the vulnerable sections (such as providing free food grains which has now been extended till March 2022) and other measures, if any, taken by the government to contain the spread of Covid-19 would have a bearing on subsequent revisions of these estimates,” the NSO said in its statement.
“The estimate does not take into account the Covid impact and hence there can be a downward bias to this number,” said Madan Sabnavis, chief economist at Bank of Baroda.
“Based on this number, the RBI will probably retain its earlier stance and not revise any of the rates. In fact, the accommodative stance will continue and the hike in reverse repo rate will be put off. The possibility of lockdowns will ensure that an easy liquidity policy is pursued unless the inflation number to be released turns out to be very high, which does not look likely,” said Sabnavis.