In an astonishing announcement the Gross Domestic Product (or GDP) of India reached a huge record high of 20.1%. June 30th saw the end of the first quarter and the government released the data on the economic growth of India.
The ministry of statistics mentioned in a press release that the constant prices in Q1 of 21-22 is estimated to be around Rs 32.38 lakh crore against the lower Rs 26.95 lakh crore for Q1 20-21. This equals a huge rebound growth of 20.1%.
This rather shocking jump in the GDP numbers is down to the fact there was a lower base last year and also the rebound on spending by consumers thanks to restrictions being lifted.
This great rebound for the economy of India has happened even though there was a small delay which was caused by the second wave of the virus and the proceeding waves which caused most of India to go into lockdown and thus had a knock on effect onto the economy.
Many citizens were left with free time for activities during these lockdowns – with some playing online roulette to pass the time. Visit RouletteStrategy.com/en-in If you want to hone up on your roulette skills.
But thankfully, these lockdowns didn’t have such a widespread effect on India as the full countrywide lockdown did, which has seen India see it’s fastest growing period since the middle of the 90’s.
In a briefing that was made just after the figures were announced, Krishnamurthy Subramanian, the Chief Economic Advisor made a statement about India being ready for even stronger growth for a range of different reasons such as the Capex push by the government, rapid vaccination protocols and reforms in structure.
He also commented on how all of the fundamental signs of macroeconomics – things such as inflation, forex reserves, current account deficit – all indicate that India’s economic bases are incredibly strong.
Low Base Effect Explained
One of the biggest reasons for this huge jump in the GDP of India is because of what’s known as the low base effect. In simple terms it’s about the base month or year which the current figure is being compared to.
With annual or quarterly GDP information, economists will always compare with the exact same quarter from the previous year.
For 2021, the 20.1% GDP growth is being compared to the GDP data that was recorded for 2020, or the previous year.
When the pandemic hit India last year, the country went into a strict lockdown, which had a huge impact on the economy, causing a huge downturn in the economy – it ended up going down over 24% compared to the Q1 results of 2019-2020.
Other Signs of Growth
As Well as the low base effect, there are some other major signals that point to India’s economy recovering.
There are a number of different sectors of the economy which have since picked up from the slump, including farming, construction, auto sales, retail and even exports.
Alongside this, the equity indices swelled to a record breaking high with the BSE Sensex breaking 57,000 for the very first time. In total, the index of 30 different shares gained a massive 4,000 just in August 2021.
There has also been great growth for the IMF or International Monetary Fund and the GST collection. Altogether the RBI or Reserve Bank of India has projected a growth of 9.5% for the current fiscal year, but that isn’t set in stone and could change depending on what the future brings.
India isn’t the only country being affected by the low base effect – The State Bank of India has said most countries have seen about the same double digit growth in GDP thanks to it.
The United States of America has actually been the first country among the G7 countries to get back to a more normal GDP percentage level, with the European members still suffering a slightly slower growth rate thanks to the harder contractions of GDP when the pandemic hit.