Amid rising inflation, high fuel prices, all eyes are on annual GDP data

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GDP data for 2021-22 is due today amid rising inflation and high fuel prices

With inflation reaching record highs, fuel prices soaring due to soaring global crude oil rates, and the impact of Omicron threatening to damage the economy, in such a scenario, the government would today release GDP data for 2021-22 as well as the March quarter of this fiscal year.

The economy is expected to grow by 8.9% in 2021-22 according to the Ministry of Statistics and Program Implementation (MoSPI), which publishes GDP data. If the GDP data comes close to that mark, then that would be a huge growth from a 6.6% contraction seen in 2020-21 (see chart below).

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The Reserve Bank of India (RBI) forecast GDP growth of 9.5% for 2021-2022 and kept March quarter growth at 6.1%.

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The International Monetary Fund (IMF) predicted India’s growth would be 9% in 2021-22, while Fitch held it steady at 8.4%.

Nominal GDP would also be higher in 2021-22 than in 2020-21 if growth were close to the forecast mark of 8.9%. (See table below)

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RBI’s projection of 6.1% growth in the March quarter of 2021-22 – if it manages to come close – would be an improvement on the 5.4% GDP growth that has been forecast. observed in the third or quarter of December of said financial year.

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India’s GDP had grown by 5.4% in the December quarter of 2021-2022, which was lower than the 8.4% growth seen in the September quarter. However, it was well above the 0.5% growth observed during the corresponding period (October-December) of 2020-21.

According to a Reuters poll, India’s GDP apparently grew by 4% in the January-March quarter of 2021-22 from a year earlier.

In the first quarter of 2021-2022, economic growth had reached a prodigious figure of 20.1%, which was mainly due to the weak base effect.

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The economy had grown 0.5% in the third quarter of 2020-21, 1.6% in the fourth quarter of 2020-21, 20.1% in the first quarter of 2021-22 and 8.4% in second quarter of current budget. In the third quarter of 2021-2022, growth was 5.4%.

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However, as can be seen, there has been a downward spiral in economic growth since the last three quarters of 2021-22, albeit in positive territory (see chart above). And if March quarter growth is less than predicted by the Reuters poll, then that would be a continuation of the slide.

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