A jump in government spending in September has led Icra to upgrade its GDP growth estimate for the second quarter of FY2021-22 to 7.9 per cent, according to a release.
The domestic rating agency's earlier estimate for real GDP growth for the July-September period was 7.7 per cent. The GDP had grown by over 20 per cent in Q1FY22 on a low base as the pandemic's first wave raged.
The RBI has forecast a 9.5 per cent growth rate in FY22. "Economic activity in Q2 FY22 was supported by a pick-up in industrial and service sector volumes after the second wave of Covid-19 subsided and rising vaccine coverage revived confidence.
Additionally, healthy Central and state Government spending, robust merchandise exports and continuing demand from the farm sector supported economic activity in that quarter," its chief economist Aditi Nayar said. Nayar said this would be an improvement when compared to the COVID second wave-hit first quarter of the fiscal.
A normalising base is expected to lead to a moderation in the growth when compared with the year-ago period, the agency said. The central government's non-interest revenue expenditure expanded by 15 per cent in Q2FY22, compared to the contraction of 7.3 per cent in Q1FY22.
Additionally, for the 22 state governments for which data is available, revenue expenditure expanded by 13.1 per cent in Q2FY22, a step up from the 10.6 per cent growth in Q1FY22.
The agency estimates growth by gross value added basis for the industry, services and agriculture, forestry and fishing to come at 8.5 per cent, 7.9 per cent and 3.0 per cent, respectively, for the quarter.