India’s economic recovery gathered pace in Q4 FY21, registering real GDP growth of 1.6% YoY compared to 0.5% YoY in Q3. Economic recovery was broad-based in Q4; however, the reliance on government spending increased. For FY21, the real GDP print for FY21 came at -7.3% YoY, close to our projection of -7.5%. This is the second yearly economic contraction since FY1980 and the severest at least since FY1952. However, implicit in the annual contraction numbers is the underlying economic recovery that came to light H2 FY21 onwards buoyed by normalization of economic activity, pent-up demand, and policy support. On the outlook for FY22, we expect economic growth to be around 9.9% YoY in the current year, accounting for the likely impact of the second COVID wave in Q1, followed by a quick rebound.
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