India maintains status as fastest growing economy

India again fastest growing major economy, posts 8.4% growth in Q2

The gross domestic product (GDP) had contracted by 7.4 per cent in the corresponding July-September quarter of 2020-21

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India's economy grew 8.4 per cent in the July-September quarter of the current financial year (2021-22), marking the fastest expansion among major economies of the world with revival of government spending and private consumption as disruptions thrown up by the second Covid wave eased.

This is the fourth consecutive quarter of growth in the economy after two quarters of contraction last year.

The official data released Tuesday showed the recovery in the economy was broad-based with manufacturing, mining and services sector demand showing considerable improvement. A low base of last year also aided to expansion in the quarter under review. Last year in July-September quarter the economy had contracted 7.4 per cent.

Read | India to log double-digit growth this fiscal: CEA Subramanian

“The Q2 growth rate above 8 per cent has propelled India as the world’s fastest growing major economy. We saw economic activities returning to normalcy… The result of the government spending is visible in the contribution of the real estate and construction sectors. Agriculture has chipped in too on the back of good monsoon. Hope RBI continues t o support growth with its accommodative policies even though there is a threat to inflation derailing the trajectory,” said Vikas Khandelwal, CEO, Eqaro Gurantees.

However, high commodity prices and emergence of the new Covid Omicron variant infused uncertainty in the system, which if lingered and aggravated, might impact business and consumer sentiment, according to Rajani Sinha, Chief Economist at Knight Frank India.

The gross domestic product (GDP) at current prices in the July-September quarter was estimated at Rs 55.54 lakh crore as against Rs 47.26 lakh crore in the same quarter last year, showing a growth of 17.5 per cent. But this is the measure which does not adjust for inflation.

Sector wise, while the manufacturing sector grew 5.5 per cent, construction expanded 7.5 per cent, both posting moderate growth compared to last year. Agriculture continued to expand at 4.5 per cent, while mining accelerated at a record 15.4 per cent.

Public administration, defence and other services grew 17.4 per cent compared to 5.8 per cent expansion in the previous quarter. Trade, hotels, transport services grew 8.2 per cent.

The private final consumption expenditure, which includes consumption spends of households, grew to Rs 19.48 lakh crore in the September quarter, up from Rs 17.83 lakh crore in the June quarter.

Gross fixed capital formation, which is a measure of investment in the economy, grew 11 per cent in the quarter under review.

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