Weak construction activity, slow growth in auto sales and decline in government spending have led to slower growth in non-farm sector. (Rupixen.com/Unsplash)

MUMBAI, India — Indian financial service agency Motilal Oswal Financial Services on Sept. 5 projected a real gross value added (GVA) growth of seven to eight percent year-on-year in the second quarter of the current fiscal year versus 20.1 percent growth in the first quarter of the fiscal year 2022.

It said estimates suggest some moderation in economic activity index (EAI)-gross value added growth in July, mainly on account of weaker fiscal spending. On the other hand, private spending (consumption and investments) has grown decently.

“The percentage of value that comes from tech is changing significantly, and that gives long-term visibility. Overall economic growth is expected, along with the increase in technology indicating exciting times ahead — Rajesh Gopinathan, CEO & MD, TCS,” Motilal Oswal Financial Services tweeted.

“IT is an unforgiving industry; it is always in dynamic equilibrium. TCS is focused on integrating itself very deeply into the tech value chain and building and retaining its trust among customers.”

Motilal Oswal said that although there is no one-to-one correlation between its economic activity indexes and the official GDP/gross value added due to the underlying differences, the composite index moves in sync with the official real GDP (ex-discrepancies) real GDP gross value-added estimates.

“Accordingly, we expect real gross value added growth of 7 to 8 percent year-on-year in the second quarter of FY22 versus 20.1 percent year-on-year growth in the first quarter of FY22,” the firm said.

It said private consumption grew at the three-month highest pace in July. Investment growth moderated while economic activity index-gross value-added grew slower at 7.7 percent.

Covid-19 third wave fears seem to be restricting economic growth in August as well.

Motilal Oswal said total consumption grew 5.1 percent versus 2.7 percent in June and minus 12.1 percent in July last year.

Within consumption, private consumption grew at a three-month high of 6.9 percent though government consumption fell 31 percent in July.

Most of the indicators analyzed monthly to track the progress in economic growth paint a mixed picture for August.

“While e-way registrations, toll collections, mobility indices, and power generation have increased at a faster rate, auto registrations and manufacturing PMI have weakened in the recently-concluded month,” the firm said.

“Fears of a potential third wave seem to be restricting economic activity at this stage.”

While government Capex declined for the second time in the first four months of FY21, the private sector saw a decent growth on the low base of July last year.

“And while manufacturing sector grew strong, weak construction activity, slower growth in auto sales and decline in government spending led to slower growth in the non-farm sector,” said Motilal Oswal.

(With inputs from ANI)

Edited by Saptak Datta and Praveen Pramod Tewari

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