Help us decode the first quarter GDP numbers. Coming in at 20.1%, a healthy growth is being seen in the construction and manufacturing sectors as well. Where do you see things headed from here?
This number is very healthy and it shows that the economy was able to withstand the second wave much better in terms of the economic activity although there was a human cost. Before the pandemic in 2019, manufacturing had really collapsed and so the contribution of manufacturing is very relevant. Also, construction is always the lead sector. It is important for earnings also but it is very positive for growth next year, especially since the vaccination drive is also picking up.
Now we have quite a large percentage of the vulnerable population covered at least with the first dose. But what I am interested in seeing is being able to get the numbers myself. So, what is the ratio of private final consumption from the churn? Can you tell me?
What I can tell you so far is that from April to June, public administration has come in at 5.8% versus minus 10.2% on year-on-year basis; private final consumption expenditure meanwhile grew at minus 12% on year-on-year basis and is coming in at 19% on quarter-on-quarter basis at constant prices. Given the fact that there is uncertainty around the third wave of Covid-19 in October and November, how big a downside risk could that be for the kind of numbers that the government as well as the central bank is talking about at the end of this year of close to 9.5 to 10%?
We have gone through the second wave pretty comfortably in terms of economic growth. We will be able to handle the third wave similarly and we are also better prepared in terms of hospital beds and medical facilities. I think that we are better prepared this time; we have learnt how to live with it in terms of economic performance. Contact industries are still suffering but what is really compensating now is the exports growth because that is pretty robust.
Again, I have not seen the numbers yet but other reports are showing that exports have done pretty well. Also the government expenditure, the government budget data, has lately been released and that shows that they have done quite well in terms of expenditure and revenue compared to last year when it was a total disaster in Q1.
So with support from government expenditure and low interest rates, I am looking for a turnaround in investment. We are already seeing the beginning, led by public infrastructure spending but a number of industries like cement are running capacity constraints.
We are seeing signs of more investment plans, the Indian unicorn and start-ups are already there and construction is in a nice spot and this should lead to a rise in employment.
