India’s GDP growth likely touched record

Indian economic growth likely touched a record high in the quarter through June, reflecting a very weak base last year and a rebound in consumer spending, a Reuters poll found.

The Aug. 20-25 Reuters poll of 41 economists showed gross domestic product rose 20.0 per cent in the three-month period, compared with a record contraction of 24.4 per cent in the same quarter a year earlier. Forecasts in the poll ranged from 10.5 per cent to 31.6 per cent, showing the considerable uncertainty around those base effects.

The rebound came despite the drag from the deadly second wave of the coronavirus, which forced states across India to reimpose localised lockdowns and stop mobility completely from late April to early June.

But unlike during the nationwide lockdown last year, repeat state-level lockdowns had a less pronounced impact on the economy as they left more room for consumers to spend.

“India’s second Covid-19 wave acted as a stumbling block to the robust recovery that was underway. Still, the economic damage appears to be less than previously expected,” said Rahul Bajoria, chief India economist at Barclays.

If the poll median is realised, it would be India’s fastest growth since official quarterly data started being released in the mid-1990s. That’s up sharply from 1.6% in the previous quarter, but a bit slower than the Reserve Bank of India’s 21.4 per cent projection.

The second wave of the Covid-19 pandemic began in April just as the economy was beginning to rally from a lull at the start of the year.