Leading rating agency India Ratings expects the economy to grow 8.3 percent in Q2 and close the year with 9.4 percent in FY'22, which is 10 bps lower than the consensus forecast. The agency has attributed the higher growth to the nine consecutive quarters of over 3 percent agriculture growth, which has brightened consumer spending and the resultant uptick in private final consumption expenditure, which is likely to clip at around 10 percent in September quarter of the current fiscal.

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Another major reason is the near three-fold jump in vaccination, which soared to 890.21 million as of October-end from 335.72 million at June-end. The government will announce the numbers on Tuesday.

Noting that Q1 was impacted by the second wave leading to reduced workplace mobility and in turn economic activities, which at end-Q1 was 26 percent lower than the base line and 16 percent lower than baseline in FY21, it said mobility started improving only in Q2 yet it was only 7 percent annualised lower than the baseline at end-Q2 of FY22. The workplace mobility improved after vaccination pace gathered the momentum. Cumulative vaccinations jumped to 890.21 million at end-Q2 from 335.72 million at end-Q1.

Even investment activities have found support from the government's focus on infrastructure and the agency expects the fixed capital formation to grow at around 8.5 percent in Q2. The government capex grew 51.9 percent in Q2 as against 26.3 percent in the same previous quarter of the current fiscal and the aggregate capex of 24 states grew 62.2 percent in Q2 massively down from 98.4 percent in Q1.

Yet private capex revival is still slow and limited to select sectors. Since H1 growth is mainly due to the lower base, economic growth is expected to revert closer to the medium/long trend growth from the second half onwards. However, recent reforms like production-linked incentive scheme and sustained export growth may provide a fillip to the ongoing growth recovery, concludes the report.

First Published:Nov 29, 2021 7:52 PM IST