New Delhi: India’s gross domestic product (GDP) would have grown by Rs 40 lakh crore during the fourth quarter (Jan-March 2022 period) of the last financial year (FY 2021-22), according to a forecast by SBI Research. The Q4 growth at Rs 40 lakh crore is Rs 1 lakh crore less than the forecast made by India’s apex statistical organization, the National Statistical Organization (NSO) which projected GDP growth during January-March period this year to be Rs 41 lakh crore and annual GDP growth for FY 2021-22 at Rs 147.7 lakh crore.
As per the statistical calendar, the fourth quarter GDP growth numbers are due to release early next week. However, the GDP growth rate that would be released on May 31 will be revised six times over the next three years to arrive at the final growth rate. However, economists such as Soumya Kanti Ghosh, Group Chief Economic Advisor at India’s largest bank, the State Bank of India, believe that the GDP growth for FY 2021-22 would be 8.5% while the GDP growth during the fourth quarter would be at around 2.7%.
“We however believe the GDP projection for Q4 FY22 is clouded by significant uncertainties. For example, even a one per cent downward revision in Q1 GDP estimates of FY22 from 20.3%, all other things remaining unchanged could push Q4 GDP growth to 3.8%,” Ghosh said in a statement sent to ETV Bharat.
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GDP vs GVA puzzle
According to Ghosh, the other big puzzle could be the gap between Gross Value Addition (GVA) and Gross Domestic Product (GDP) numbers in the fourth quarter as tax collection showed strong growth. It means that this gap could push up the GDP number significantly, even as GVA might be much lower. According to Ghosh’s calculation, India’s GDP growth for FY 2021-22 would come at around 8.5% due to the lower base while the fourth-quarter growth would come at around just 2.7%.
However, forecasting the fourth-quarter GDP growth is a challenging task for economists as it is clouded by significant uncertainties. For example, just one percent downward revision in Q1 GDP estimates of FY 2021-22 from 20.3%, could push Q4 GDP growth to 3.8% even if all other things remain unchanged.
Sector-wise performance
Beyond the forecasts and statistics, the early trends of fourth-quarter corporate results of the listed companies in FY 2021-22 reported better growth numbers across parameters as against the corporate results during the same quarter of the previous fiscal year. However, some decline in operating margin was reported due to higher input cost.
Sectors such as Steel, FMCG, Chemicals, IT-Software, Auto Ancillary, and Paper etc. reported better growth numbers. However, sectors such as Automobile, Cement, Capital Goods – Electrical Equipment, Edible Oil etc. though reported growth in the top line during the fourth quarter of the last fiscal but registered negative growth in the profit after tax.
