SBI Research pegs Q1 growth at 18.5%

India’s economy is likely to have grown 18.5% in the first quarter of FY22, State Bank of India Research said in its latest edition of Ecowrap, attributing the high expansion to the base effect of negative growth in the same quarter last year.

Barclays India has projected the economy to expand by 21.2% in the same quarter, anticipating a much smaller loss of activity due to the second wave of covid.

Indian economy had contracted 24.4% in the April-June quarter of last year. The gross domestic product (GDP) data for the first quarter will be released next Tuesday on August 31. Due to the uncertainty caused by the second wave, there is a wide variation in the estimates. The Reserve Bank of India had projected first quarter growth at 21.4%. Nomura expects 29.4% growth in GDP in the quarter.

“Based on the SBI Nowcasting model the forecasted GDP growth for first quarter of FY22 would be around 18.5% (with upward bias),” SBI Research said. “Higher growth in the first quarter of FY22 is mainly on account of low base,” it said before adding ultra-high frequency indicators suggest business activity picked up pace in August. “Regional Transport Office (RTO) collection, electricity consumption along with the mobility indicators have revived in the second quarter of FY22, indicating positive momentum in economic activity going forward,” SBI Research said.

Meanwhile, Barclays India has forecast the economy to expand by 21.2% year-on-year in the April-June quarter of 2021-22, while it would be 9.2% for 2021-22.

“A low base and a much smaller loss of activity due to the second covid wave has pushed growth to an all-time high for a single quarter,” it said.