“The print shows that the economic cost of the virulent second Covid-19 wave was much lower than the first,” said Gaura Sen Gupta, an economist with IDFC First Bank Ltd. “Details reveal a K-shaped recovery with much stronger growth in industries and muted growth in services,” she said.
A better-than-expected manufacturing performance and a milder hit to services, combined with a robust pace of vaccinations, also helped keep the annual growth outlook for the economy steady at 9.2%, according to a Bloomberg survey. That pace will be the quickest among major economies, surpassing China’s 8.5%.
The rupee completed its biggest monthly gain since May before the data was released, while stock indexes hit a new high amid optimism about the economy’s strong recovery. Bonds were up slightly.
Latest high-frequency data showed the impact of pandemic restrictions were less severe than last year, enabling demand to recover quickly in the consumption-driven economy. Loans for consumer durables and vehicle purchase, as well as to real estate and small businesses, grew in July, both in terms of month-on-month and from a year earlier, data published by the Reserve Bank of India showed.
India’s large young population and highly developed pharmaceuticals sector have allowed it to come through the pandemic in a stronger position. Simultaneously, the economy should continue to benefit as a primary destination for low-cost manufacturing as companies re-evaluate the wisdom of relying entirely on China’s workshop of the world model.Click HERE to subscribe to Fuller Treacy Money Back to top