Teji Mandi Explains: What’s the buzz on the higher GDP numbers?

Teji Mandi Explains: What’s the buzz on the higher GDP numbers?

Teji MandiUpdated: Wednesday, September 01, 2021, 07:33 PM IST
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Short Description: India’s economy grew 20.1% in the June quarter as against the decline of 24.4% during the same quarter last year. The growth is massive but experts remain concerned about all the positive buzz.

The GDP numbers bring a big cheer because the expansion this time is on a massive scale. The GST collections also improved as there was a higher collection of goods and services tax this time. The finance ministry said that the GDP data this time shows economic recovery. The stock market gave a standing ovation too and saw the fastest-ever record high level.

But what’s cushioning the GDP numbers?

The highest revenue recorded was from the construction, exports and manufacturing sectors. The construction sector jumped 68% against the decline of 49.5% in the same quarter last year. Exports also performed exceedingly well. Exports worth Rs 7.68 lakh crore in Q1FY22 were the highest in the previous nine quarters. Government officials have also said that the $400 billion annual merchandise exports target can be met this year.

Why are experts painting a gloomy picture then?

Independent experts have noted that the latest GDP growth is not the true picture of the economy. The reason is that the comparison between this year's GDP and last year is being done on a low base. Q1FY21 saw a nationwide lockdown resulting in a complete stopping of all factories, businesses, etc. Hence, the comparison is unjustified. According to experts, only exports and imports have performed exceedingly well given the resilient demand.

Conclusion

Higher exports and imports will result in rising manufacturing activity. The upcoming quarter numbers will highlight a better picture of the true state of the Indian economy. Smaller businesses have been hit badly. Until they stand back, market experts will continue debating.

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