India's economic growth accelerates to 20.1% y/y in April-June -govt

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A worker moves iron pipes after unloading them at a factory in an industrial area in Mumbai, February 29, 2012. REUTERS/Danish Siddiqui/Files

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BENGALURU, Aug 31 (Reuters) - India's economy grew at a record 20.1% year-on-year in April-June quarter, official data on Tuesday showed, rebounding from a deep slump last year, helped by improved manufacturing in spite of a devastating second wave of COVID-19 cases.

The read-out for June quarter was in line with the 20.0% growth forecast of analysts in a Reuters poll, and much higher than 1.6% growth rate for the previous year. read more

The economy had contracted 24.4% in the same quarter a year earlier.

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COMMENTARY

PRITHVIRAJ SRINIVAS, CHIEF ECONOMIST, AXIS CAPITAL, MUMBAI

"Looking ahead, we believe COVID-19 is presenting itself as less of a risk to economic recovery thanks to vaccination progress and low risk perception."

"Instead, unchecked inflation is a potential risk that can dent consumer confidence and unsettle rates and FX markets. Managing inflation is now with the government in our view."

SHASHANK MENDIRATTA, ECONOMIST, IBM, NEW DELHI

"Looking ahead, high frequency indicators remain mixed with many remaining below pre-pandemic levels. With substantial slack still in the economy, continued policy support will be required to get activity back to normalcy."

SUJAN HAJRA, CHIEF ECONOMIST, ANAND RATHI SECURITIES, MUMBAI

"The bigger improvement is coming more from manufacturing and agriculture has been resilient too. Going forward, we would expect that the services also will in a greater way participate in the overall growth."

"We expect that during the next two quarters, there will be some kind of uptick even in private consumption."

KUNAL KUNDU, INDIA ECONOMIST, SOCIETE GENERALE, BENGALURU

"Not surprisingly, after a sustained period of drawdown, inventory accumulation was an important driver as was export. Relatively robust private demand (growing by 19%) was on the back of a sharper contraction of 26% during 2Q20. On the GVA side, manufacturing growth was rather strong at 49.4%. With growth more or less on expected lines, we retain our full year real GDP forecast of 8.8% yoy."

VIVEK KUMAR, ECONOMIST, QUANTECO RESEARCH, MUMBAI

"Overall, the headline is lower than our expectations, and provide downside risk to our full year GDP growth estimate of 10.0%. Having said so, we also note that high frequency indicators as validated by our proprietary DART index have turned around since Jun-21, coinciding with receding of the COVID wave, gradual unlock at state-level and continued policy support."

"Going forward, support from global recovery, domestic vaccination, and pickup in kharif sowing would pave way for sequential expansion in economic activity."

RADHIKA RAO, ECONOMIST, DBS BANK, SINGAPORE

"India's GDP growth expanded by a record 20% y/y in the June quarter, with base effects magnifying the extent of jump in the headline, whilst the impact of the second COVID wave was better reflected in the sequential contraction, keeping overall activity at a tenth below early-2020."

"Our weekly activity gauge indicates that the economy maintained steam into July-August, benefiting from a moderate case count and expectations of a shallow third wave, if any."

"Global developments, however, warrant attention as COVID cases have risen sharply in many pockets of the world, amidst moderating growth in China, and supply chain disruptions, for instance chip supply shortage has impacting key domestic automakers."

SREEJITH BALASUBRAMANIAN, ECONOMIST - FUND MANAGEMENT, IDFC AMC, MUMBAI

"Nominal GDP for the June quarter, which witnessed the second wave of COVID-19 infections, grew 31.7 %y/y while real GDP grew 20.1%. Driven by base effect, as this actually represents a higher-than-usual quarter-on-quarter fall, the reading was slightly below consensus and also reflects a high GDP deflator."

"Vaccination progress will be crucial, given the possibility of a third wave of infections and the experience of countries which witnessed it. Support from rural, particularly agriculture, needs to be monitored given the fluctuations in monsoon rainfall and its impact on reservoir levels and crop harvest."

UPASNA BHARDWAJ, SENIOR ECONOMIST, KOTAK MAHINDRA BANK, MUMBAI

"The GDP figures for the first quarter came in marginally weaker than our expectations (21.7% growth). However, economic activity has been reviving since July and has picked up momentum. As vaccination pace picks up we expect the momentum to pickup further, although remain wary on the evolution of delta variant cases."

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Reporting by Nallur Sethuraman, Soumyajit Saha, Chris Thomas and Rama Venkat in Bengaluru; Editing by Rashmi Aich

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