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GDP Growth Rate India Grew by 20% in First Quarter



  • GS 3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.



  • Ministry of Statistics and Programme Implementation (MoSPI) released the GDP data for the first quarter of the current financial year (2021-22).
  • According to the MOSPI data, current GDP of India increased by 20.1% in April-June 2021 compared with the corresponding period last year.


Key points

  • Each year, MoSPI releases four quarterly GDP data updates, which help observers to assess the health of the Indian economy.
  • The data showed that in Q1 of 2021-22, India’s 1st quarter GDP 2021 grew by 20.1% while the GVA grew by 18.8%.
    • Notably, GDP and GVA had contracted by 24.4% and 22.4%, respectively, in Q1 of the last financial year.


GDP Growth Rate India Grew by 20% in First Quarter -_3.1


GDP (Gross Domestic Product) and GVA (Gross Value Added)

  • GDP = (GVA) + (Taxes earned by the government) — (Subsidies provided by the government)
  • As a thumb rule, if the government earned more from taxes than what it spent on subsidies, GDP will be higher than GVA.


Fiscal Stability and Development Council



  • Data related to certain high frequency indicators such as power generation, fuel consumption and railway freight for April-May indicated that rebound has been faster after Covid 2.0 than Covid 1.0.


Various sectors

  • Manufacturing and construction witnessed a positive trend in April-June, and grew respectively by 49.63% and 68.3% respectively, over April-June 2020.
  • The GDP data shows that sectors including ‘agriculture, forestry and fishing’ and ‘electricity, gas, water supply and other utility services’ are above the levels of the pre-Covid year of 2019-20.
    • Agriculture and electricity sectors have grown 8.21% and 3%, respectively, compared with April-June 2019-20.



  • Private Final Consumption Expenditure grew 19.34%
    • It is a measure of consumer spending.
  • Gross Fixed Capital Formation jumped 55.26%.
    • It is a measure of private investment.


Ubharte Sitare Fund



  • The sharp increases were largely due to the low base of the first quarter of 2020-21. Manufacturing and construction sectors, besides the consumer spending and private investment, have still some distance to cover before reaching the levels of the latest pre-Covid year of 2019-20.
  • Though the government is claiming that the economy is witnessing a V-Shaped recovery, economic experts are sceptical about it and advocates that the current statistics is largely due to the low base effect.
    • Base effect: It refers to the impact of comparing current price levels in a given month against price levels in the same month a year ago
  • Moreover, services sectors continue to lag, especially the contact intensive sectors like hospitality, travel, beauty and wellness, car repair services, among others.
  • The GDP in absolute terms at Rs 32.38 lakh crore (constant prices) in the first quarter is still 2% lower than the GDP in the same period during the pre-Covid year 2019-20.
  • This quarter witnessed a sharp fall of about 4 percentage points in the share of consumption in GDP, which is led by the government consumption.


Asset Monetisation Pipeline


Way forward

  • In view of the economic outcomes in the first quarter this year being impacted by the second wave of the Covid pandemic, it is the second quarter numbers that would be the real test of the shape of the recovery.


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