‘India’s GDP expected to grow by 8.5% YoY in Q2FY22’

New Delhi: India’s Q2FY22 GDP is expected to grow by 8.5 per cent on a year-on-year (YoY) basis amid support from a favourable base, Acuite Ratings and Research said.

As per the ratings agency, gradual removal of lockdown restrictions by most states towards the end of the last quarter will also help the GDP to grow.

Besides, it predicted a GVA growth of 7.5 per cent on YoY basis in Q2FY22.  According to the agency, the steady progress in vaccination has improved consumer sentiments.

Furthermore, the economy has been supported by relative resilience of the industrial sector and a gradual rebound in services sector with improved mobility, buoyancy in exports, and improved government capital expenditure.

For FY22, we continue to retain our GDP growth forecast at 10 per cent albeit with some downside risks emanating from global supply chain disruptions, elevated commodity prices that may tighten inflationary pressures as demand makes a comeback and a potential volatility in global markets as central banks attempt a normalisation of monetary policies, its Chief Analytical Officer Suman Chowdhury said.

Meanwhile, India and the US have agreed on a ‘transitional approach’ on ‘Equalisation Levy’ 2020.
According to Ministry of Finance, India and the US will remain in close contact to ensure that there is a common understanding of the respective commitments and endeavor to resolve any further differences of views on this matter through constructive dialogue.
The final terms of the agreement shall be finalised by February 1, 2022.

Notably, on October 8, 2021, India and the US joined 134 other members of the OECD or G20 Inclusive Framework in reaching agreement on the ‘Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy’.

Furthermore, on October 21, 2021, the US, Austria, France, Italy, Spain, and the UK reached an agreement on a transitional approach to existing ‘Unilateral Measures’ while implementing ‘Pillar 1’.

The agreement is reflected in the joint statement that was issued by those six countries on that date (‘October 21 Joint Statement’).

Accordingly, India and the US have agreed that the same terms that apply under the ‘October 21 Joint Statement’ shall apply between the US and India with respect to India’s charge of 2 per cent equalisation levy on e-commerce supply of services and the US’ trade action regarding the said ‘Equalisation Levy’.

However, the interim period that will be applicable will be from 1st April 2022 till implementation of ‘Pillar 1’ or 31st March 2024, whichever is earlier, the ministry said in a statement.

 

NT Bureau