India's Q4 GDP to be announced today: What to expect?

The Central Statistics Office (CSO) will release India's gross domestic product (GDP) numbers for January-March quarter and financial year 2020-21 on Monday evening. The economy is likely to continue its expansion in the positive territory from December quarter.

Hit by the COVID-19 pandemic and the nationwide lockdown imposed to curb the spread of infections last year, India's economy contracted during the first half of FY21, before returning to positive territory in October-December quarter with a growth of 0.4 per cent. In April-June, the economy had shrunk by 23.9 per cent, which improved to 7.5 per cent contraction in July-September.

The CSO had projected 8 per cent GDP contraction in FY21, implying a contraction of 1.1 per cent in March quarter. Meanwhile, the Reserve Bank of India had projected a 7.5 per cent contraction for FY21. However, most of the analysts expect the economy to have bounced back at a better-than-expected pace in March quarter, and see FY21 contraction to be less than CSO's projection of 8 per cent.

According to SBI research report, India's GDP is likely to expand by 1.3 per cent in January-March quarter, thereby leading to a less-than-expected 7.3 per cent contraction during FY21.

Also read: India's GDP to contract by less-than-expected 7.3% in FY21: SBI

"Based on quarterly GDP numbers in FY21 and full year FY21 GDP estimates, Q4 GDP was projected to reveal a contraction of 1.1 per cent. Based on SBI Nowcasting model the forecasted GDP growth for Q4 would be around 1.3 per cent (with downward bias). We now expect GDP decline for the full year to be around (-)7.3 per cent," the research wing of State Bank of India (SBI) said in its 'Ecowrap' report.

Domestic ratings agency ICRA has forecasted a 2 per cent GDP growth in the fourth quarter of 2020-21, and a 7.3 per cent contraction for the full fiscal year. From a GVA or gross value added perspective, the agency pegged Q4 growth at 3 per cent and full-year contraction at 6.3 per cent.

More pain ahead?

While most analysts had projected a double-digit growth for Indian economy in FY22, albeit on a lower base, the second wave of COVID-19 pandemic and lockdowns imposed by state governments to control the surge in cases has led to revisions in growth estimates.

While Moody's revised downwards its forecast for India's economic growth in FY22 to 9.3 per cent from an earlier projection of 13.7 per cent, Barclays also cut its growth estimate by 0.80 per cent to 9.2 per cent. Besides, analysts have warned that a third wave of pandemic and restrictions on economic activities can lead to further revisions in India's growth estimates.

Also read: COVID-19 2nd wave: Barclays slashes India's FY22 GDP growth estimate to 9.2%