Hey there!
Your daughter is SO lucky to have you as her mother!!
The twos can be rough and some children are more challenging than others. Your granddaughter could be a highly physical or needy child that needs 100% consistency and an unchanging routine to relax into.
The thing that is troubling in your message is that your daughter seems to have told you that she is afraid of hurting her little one.
While almost all mothers have been at the end of their ropes at one time or another, it's NOT normal to feel that way every single day unless (1) the mother needs some sort of intervention - help with ppd, as others have noted, or parenting classes, or (2) the child's behavior is extreme and therefore needs to be evaluated.
Are the granddaughter's verbal skills good? If not, has your daughter tried teaching her daughter some basic sign language?
Your daughter desparately needs a break - daily at this point, if at all possible. If she can't afford a babysitter to come by for 1-2 hours everyday or every other day, could you pay for this for a set amount of time, say for one month?
One last thing, some people believe in swatting a child for behavior and some are completely against it.
Whatever your (and your daughter's) beliefs, EVERYONE agrees that you should NEVER swat a child if you are angry or frustrated. Your daughter is already afraid she will hurt her child, so I would highly recommend that she NOT swat or hit your granddaughter. It's just too risky.
Your daughter may be suffering from ppd or she just may need some good parenting classes and a break here and there. It's hard to say.
I'm glad she has someone like you reach out to - if you can convince her to get checked for ppd, to find some parenting classes and to find some way to get a break, you'll be doing so much for her. Bless you!!