India’s economy slowed down for the third consecutive quarter in the January to March period to grow at 4.1%, while the National Statistical Office pared down overall growth forecast for FY22 a tad to 8.7% from 8.8% estimated in January.
However, elevated level of inflation and rising interest rates are expected to temper economic growth momentum in FY23.
The slow growth is mostly due to soaring prices and the subsequent hit to consumer spending and investments, according to analysts.
“GDP at Constant (2011-12) Prices in Q4 2021-22 is estimated at Rs 40.78 lakh crore, as against Rs 39.18 lakh crore in Q4 2020-21, showing a growth of 4.1 percent,” the government data added.
The country’s GDP had expanded 20.1 per cent in the April-June quarter, 8.4 per cent in July-September and 5.4 per cent on October-December quarter of the financial year 2021-2022, mostly because of weak performances in the same quarters in 2020 when the pandemic took hold.
ICRA’s chief economist, Aditi Nayar, had said that the services sector might grow at 5.4% due to increased demands witnessed this year. However, the agriculture and industry segments might suffer a dip this time.
Higher raw material cost has impacted margins of companies which poses a challenge to the recovery in private investment.
In January-March last year, the Indian economy had grown 1.6 per cent.
The GDP growth of 8.7 per cent is lower than the 8.9 per cent pegged in the second advance estimates (SAE) for 2021-22 released by the National Statistical Office (NSO) in February.
Gross value added (GVA) — which is GDP minus net product taxes, and reflects growth in supply — grew 8.1 per cent. Net taxes on products gres 16.1 per cent to Rs 11.3 lakh crore in the financial year 2021-22.
Almost all analysts had predicted the January-March 2022 growth to be lower at 2.7-4.5 per cent than the 5.4 per cent reported in the previous quarter. SBI expected growth at 2.7 per cent for the fourth quarter of 2021-22, rating agency Icra saw 3.5 per cent growth, and CRISIL forecast it at 4.5 per cent. For the full financial year 2021-22, the Asian Development Bank (ADB) had projected India’s growth at 7.5 per cent, while the International Monetary Fund (IMF) expected it at 9 per cent.
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