New Delhi: India’s economic growth slowed for a third straight quarter in the January-March period, at 4.1 per cent, data released on Tuesday showed. For full FY22, the National Statistics Office pared its growth forecast marginally to 8.7 per cent from the 8.8 per cent estimated in January. As per the data, the Indian economy witnessed a 6.6 per cent contraction in 2020-21.
Further, an elevated level of inflation and rising interest rates are expected to temper economic growth momentum in FY23.
During the March quarter, agriculture grew at 4.1 per cent, while manufacturing contracted 0.2 per cent. Public administration, defence and other services, which represent government expenditure, grew 7.7 per cent during the March quarter, boosting overall economic growth. Among other sectors, mining and quarrying and construction grew 6.7 per cent and 2 per cent, respectively.
"GDP growth for Q4 FY22 at 4.1 per cent reflects the impact of the Omicron wave, higher input costs and a high base in certain sectors from last year. Manufacturing activity contracted while agriculture was the biggest support. The worrying part remains private consumption, which saw a decline in share in GDP in the fourth quarter.
"With rising inflationary pressures, consumption recovery remains under a cloud of uncertainty for FY23. We expect growth to print at 7.2 per cent in the current fiscal. This GDP print does little to change our view that the RBI is likely to raise rates by 25 bps at the upcoming policy," said Sakshi Gupta, principal economist, HDFC Bank.
According to the NSO data, India's real GDP grew to Rs 147.36 trillion from Rs 135.58 trillion in 2020-21. Gross value added (GVA) growth during the fiscal ending March 2022 was at 8.1 per cent as against a contraction 4.8 per cent in the preceding year.
The GVA growth in the manufacturing sector accelerated to 9.9 per cent during the year as against a contraction of 0.6 per cent earlier.
GVA growth in both mining and construction was 11.5 per cent. These two large segments of the economy had contracted in the COVID-hit 2020-21.
However, agriculture sector growth decelerated to 3 per cent from 3.3 per cent in FY21.
Electricity, gas, water supply and other utility services segment grew by 7.5 per cent during 2021-22. The segment had contracted by 3.6 per cent in the previous fiscal. GVA growth in services sector -- trade, hotel, transport, communication and services related to broadcasting -- was 11.1 per cent during 2021-22 as against a contraction of 20.2 per cent in the previous year.
Financial, real estate and professional services grew by 4.2 per cent in the year over 2.2 per cent earlier.
Public administration, defence and other services posted 12.6 per cent growth against (-)5.5 per cent in 2020-21.
"Real GDP at Constant (2011-12) Prices in the year 2021-22 is estimated to attain a level of Rs 147.36 trillion, as against the First Revised Estimate of Rs 135.58 trillion for the year 2020-21.
"The growth in GDP during 2021-22 is estimated at 8.7 percent as compared to a contraction of 6.6 percent in 2020-21," the NSO said.
Also, nominal GDP or GDP at Current Prices in 2021-22 was estimated at Rs 236.65 trillion, as against Rs 198.01 trillion in 2020-21, showing a growth of 19.5 per cent As per the NSO data, per capita income (based on net national income) during 2021-22 was Rs 1.5 lakh per annum at current prices, up from 1,26,855 in 2020-21, showing a growth of 18.3 per cent.
However, at constant prices, per capita annual income works out to be Rs 91,481, up 7.5 per cent from Rs 85,110 in FY21.
Gross fixed capital formation was estimated at Rs 47.84 trillion in 2021-22, up from Rs 41.31 trillion in the preceding year.
"Fourth quarter of FY22 GDP growth eased to 4.1 per cent y/y, with the sequential pace restrained by temporary mobility restrictions imposed back then, impact of inclement weather and, separately, high commodity prices on account of geopolitical risks, besides a high base.
"We don't expect this outcome to materially disrupt the central bank's policy normalisation plans. This subdued reading is likely to be followed by a strong double-digit growth in June'22 quarter on base effects," said Radhika Rao, senior economist, DBS Bank. The country's GDP growth had stood at 20.3 per cent in the April-June quarter of FY22, and 8.5 per cent in the July-September quarter. During the third quarter of 2021-22, it slowed to 5.4 per cent but was higher than China's GDP expansion of 4 per cent; the country retained its position as the world's fastest-growing major economy.
The economy's near-term prospects have been darkened by a spike in retail inflation, which hit an eight-year high of 7.8 per cent in April. The surge in energy and commodity prices following the Ukraine crisis has also been a drag on the economic activity.
The Reserve Bank of India (RBI) raised the benchmark repo rate by 40 basis points in an unscheduled meeting early this month.
Soaring prices and the subsequent hit to consumer spending and investments dampened India's economy, as the Reserve Bank of India faced a finely balanced struggle to tame inflation via rate hikes without hurting economic growth, economists said. — PTI
