ICRA projects two percent GDP growth for Q4 FY21

"ICRA forecasts pick-up in the growth of the Indian GDP to 2.0 percent in Q4 FY2021 from 0.4 percent in Q3 FY2021, suggesting that the double-dip recession implied by the National Statistics Office (NSO) for Q4 FY2021 was averted," said the agency.

The agency also expects the growth of gross value added (GVA) at basic prices to have risen to 3.0 percent in Q4 FY2021 from 1.0 percent in Q3 FY2021, it added.

“We have forecast GDP growth to trail the GVA expansion in Q4 FY2021, on account of the assessed impact of the back-ended release of subsidies by the Government. We believe that the trend in the performance of the GVA may be a more meaningful gauge of India’s economic recovery in Q4 FY2021,” said Aditi Nayar, Chief Economist, ICRA Ltd.

"With the vaccine optimism fuelling a rally in global commodity prices, higher raw material costs are expected to have compressed margins to an extent in some sectors,” she added.

On balance, ICRA expects the growth in manufacturing GVA to increase to 4.0 percent in Q4 FY2021 from 1.6 percent in Q3 FY2021, sources said.

“Nevertheless, the extent of recovery in the performance of the informal sectors in Q4 FY2021 remains uncertain, and we continue to caution that trends in the same may not get fully reflected in the GDP data, given the lack of adequate proxies to evaluate the less formal sectors,” Nayar said.