GDP growth springs a positive surprise: Four implications for FY22

The positives apart, it is clear consumption can't rebound meaningfully without large-scale vaccination; the good news is the rate is likely to improve steadily in the coming months

India’s GDP growth surprised positively in the fourth quarter and financial year 2020-21. Initial estimates by CSO suggested GDP growth at (-) 8 per cent in 2020-21. Accordingly, the imputed growth for the quarter ending March 2021 was (-) 1.1 per cent. As against this, the latest estimates show GDP at (-) 7.3 per cent and (+) 1.6 per cent, respectively during 2021-21 and quarter ending March 2021. Most of the positive surprise was already seen in the last quarter.

What drove this outcome? On the demand side, government spending rose by 28.3 per cent in the last quarter. In