NEW DELHI -- India's economy grew 20.1% in the April-June quarter despite the country's deadly second coronavirus wave, mainly owing to a low base last year, official data released on Tuesday showed.
Ahead of the data's release, a Reuters poll of economists had estimated 20% growth for the three months through June, the first quarter of the country's financial year -- lower than the 21.4% predicted by the Reserve Bank of India, the central bank.
In the same period last year, an unprecedented 24.4% contraction was seen as Asia's third-largest economy imposed one of the world's strictest lockdowns to contain the first wave of the COVID-19 pandemic, which severely hit businesses. For the whole of the last fiscal year through March, gross domestic product shrank 7.3%.
"This is on expected lines," N. R. Bhanumurthy, vice chancellor of the Bengaluru Dr. B. R. Ambedkar School of Economics University, told Nikkei Asia, reacting to the first-quarter numbers. "Already, there were leading indicators that suggested there was a recovery plus there is a base impact [from last year's negative growth]," he said.
Among the sectors that performed well in the first quarter are construction, which grew 68.3% versus a contraction of 49.5% in the same period last year, and manufacturing, which expanded 49.6% against the negative growth of 36% in April-June of 2020. The agricultural sector advanced 4.5% from a year ago quarter, when it had grown 3.5%.
It is mostly the "statistical mirror image of what happened in the same period last year, but what is important is the growth in the agriculture sector, which was the only sector which didn't show negative growth in Q1 of last financial year," Bhanumurthy said. "This shows the agriculture sector is doing much better ... which is good news," he added, projecting overall economic growth of about 9% for the entire fiscal year.
The damage to the economy during the second wave does not appear to be as severe as it was last year because localized lockdowns were put in place to control the COVID spread, instead of the nationwide shutdown during the first wave.
The country of more than 1.3 billion people saw over 400,000 confirmed daily infections at the height of its second COVID wave in early May -- far higher than the peak of 97,000 per day it experienced last September -- but in recent weeks new cases fell to less than 50,000 per day. As of Tuesday, India had a total case count of 32.77 million, with 438,560 deaths.
Analysts say the economic recovery in the whole of the current financial year will depend on the progress of the country's vaccination drive. As of Friday, 50% of India's adult population of 944 million had received a first dose, while 15% had gotten both doses.
The country, which is currently administering about 5 million doses a day on average, aims to fully inoculate all its adults by the end of December. To attain that goal, it needs to nearly double the daily rate of vaccination.
"Going by the pace of vaccination, it is now almost certain that India will not be able to vaccinate its entire adult population by 31 December 2021," India Ratings and Research, a Fitch Group company, said in an Aug. 19 note, revising downward its GDP forecast for whole of the current financial year to 9.4% from an earlier projection of 9.6%.
Bhanumurthy agreed that vaccination will be one of the "biggest" determinants for the pickup in growth. But he pointed out that India administered over 10 million doses in a single day last week and was close to touching the same number on Tuesday.
"If [the pace of vaccination] continues like that and some more vaccines come into the market and some new vaccines come in for the children, the economic activity will start picking up," he said.