GDP contraction likely to be 9.5% in Sept: Icra

Mumbai: The contraction in the country's Gross Domestic Product (GDP) may have narrowed to 9.5 per cent in the second quarter of the current fiscal from 23.9 per cent in the April-June quarter, says a report.

The Central Statistics Office (CSO) will release the GDP data for the second quarter of FY21 on November 27.

In a report on Thursday, rating agency Icra said the Year-on-Year (YoY) contraction in Indian GDP (at constant 2011-12 prices) is estimated to have narrowed appreciably to 9.5 per cent in Q2 FY2021 from 23.9 per cent in Q1 FY2021, as the economy recovered from the lows of the pandemic-induced lockdown.

It said the contraction in the Gross Value Added (GVA) at basic prices is expected to have moderated considerably to 8.5 per cent in the July-September quarter from 22.8 per cent in the previous three months.

The ease in GVA would be led by industry to (-) 9.3 per cent from (-) 38.1 per cent, driven primarily by manufacturing and construction and services to (-) 10.2 per cent from (-) 20.6 per cent), it said.

Icra's principal economist Aditi Nayar said a substantial recovery in manufacturing and construction is likely to underpin the expected improvement in the performance of the industrial GVA in the second quarter of the current fiscal. Various sectors of manufacturing recorded an improvement in demand and volumes in the September quarter although the performance was admittedly uneven.

In addition to the continued cost-cutting measures, the availability of raw material inventory that had been procured previously at subdued costs, supported the earnings of the manufacturing entities in the just-concluded quarter relative to Q1 FY2021.