Economic recovery still needs policy support

The second advance estimates (2AE) of GDP, released on Monday, projected FY22 real growth at 8.9 per cent, down from 9.2 per cent in the first advance estimates released in January. However, the momentum of recovery and activity is better judged by quarter-wise growth (since this is of more immediate salience).

Real Gross Value Added (GVA) growth in the October-December quarter of FY22 was 4.7 per cent (compared to 2.1 per cent in the corresponding quarter of FY21). GDP growth was a bit better at 5.4 per cent. This growth was only modestly higher than the average growth of 3.7 per cent in the four quarters of FY20, preceding the pandemic lockdown. What does this say about the momentum of economic recovery? Given the high volatility of quarterly growth rates over the past two years, these need to be looked at carefully to separate the base effect from underlying growth.

The two sectors which contributed most noticeably towards the aggregate growth…

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