India is now one of the few economies in the world to have had positive year-on-year growth in the previous two quarters, as the country’s GDP increased by 1.6 percent in the January-March quarter of fiscal 2021. According to the Department of Economic Affairs’ recent report titled ‘Monthly Economic Review 2021,’ stronger economic growth during the fourth quarter may be connected to the economy’s unlocking and resurrection in business and consumer confidence that occurred during the period.
The GDP increased by 0.5% in the fourth and final quarters of the fiscal year 202-21, compared to the 0.5% rise in the third quarter. The economy slipped into a technical recession after contracting by a record 24.4 percent in the first quarter of the fiscal year and 7.4 percent in the second quarter.
The fourth quarter saw broad-based output increase across all industries. During the January-March quarter, the agricultural, industrial, and services sectors all saw good year-over-year growth.
Furthermore, the industrial sector expanded at an 11-quarter high of 7.9%, owing to stronger output in manufacturing (at 6.9%), electricity, gas, water, utility services (at 9.1%), and building (at 9.1%). (at 14.5 percent ). In the fourth quarter of the fiscal year 2021, the agriculture sector rose by 3.1%.
According to the report, the economy saw a significant increase in both government and private investment and consumption in the fourth quarter of the fiscal year, compared to the previous three quarters. Private consumption, which accounts for 60% of GDP and is the key driver of the economy, grew by 2.7 percent year over year in the fourth quarter.
In the January-March quarter, investment growth defined by gross fixed capital formation, or GFCF, reached a seven-quarter high of 10.9 percent. The overall economic recovery was aided by progressive activity unlocking and normalization, as evidenced by increased private consumption.
The intensity of the second wave of the COVID-19 epidemic, on the other hand, posed a risk to the economic recovery’s pace. In light of this, the Reserve Bank of India (RBI) lowered the real GDP growth forecast for the financial year 2021-22 to 9.5 percent at its second bi-monthly Monetary Policy Committee (MPC) meeting.