Q3FY21 GDP Preview | All key sub-sectors will record growth: Barclays India

India's Gross Domestic Product (GDP) contracted by 6.6 percent in FY21, according to the National Statistical Office's first revised estimate released on January 31. [Image: Shutterstock]

All key sub-sectors of the economy are expected to record growth, according to the latest Barclays India report, which sees some momentum spilling over to the next quarter as well.

There is a “scope for steady agricultural-sector growth, even though there are clear signs of weakness in rural-consumption data” during October-December 2021.

“Growth was slower in mining, construction and manufacturing, partly on account of supply chain disruptions, especially for the auto sector,” said the report.

Supply shortages and the high base weigh on manufacturing, while services output may grow at a faster clip to lead the growth recovery in Q3FY22, it said.

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“There also was a clear jump in mobility levels, as tourism activity, air traffic, railway-freight traffic, fast-tag ETC payments and mobility data all showed a return to near pre-COVID trends. Credit growth also continued to pick up, and corporate profitability remains strong,” the report said.

While appreciating India’s vaccination programme, Barclays India said subsequent COVID-19 waves would pose less of a threat to consumers and business optimism. That, consequently, should add resilience to the economic activity, it added.

“With a mild Omicron wave in January, we see clear downside risks of growth forecast of 10 percent year-on-year in FY21-22,” the report said.

India's Gross Domestic Product (GDP) contracted by 6.6 percent in FY21, according to the National Statistical Office's first revised estimate released on January 31. The revised estimate compares favourably with the provisional estimate of a 7.3 percent contraction, released in May 2021.