India’s GDP growth accelerates to 6.1% in March quarter beating Street estimates; FY23 growth at 7.2%

India's gross domestic product or GDP grew by 6.1 per cent in the fourth quarter of fiscal year 2022-23, compared to a growth of 4.4 per cent growth in the previous October-December quarter, as per the official data shared by the National Statistical Office. The Street had expected a growth of 5.5 per cent during the fourth quarter. 

For the entire fiscal 2022-23, the economy's growth rate came in at 7.2 per cent, higher than the central bank's estimate of 7 per cent. However, the pace of growth was slower as compared to 9.1 per cent recorded in FY22.

Catch live updates: India Q4 GDP LIVE updates: GDP rises to 6.1% in Q4, FY23 growth better-than-expected at 7.2%

"Real GDP or GDP at Constant (2011-12) prices in the year 2022-23 is estimated to attain a level of ₹160.06 lakh crore, as against the First Revised Estimates of GDP for the year 2021-22 of ₹149.26 lakh crore. The growth in real GDP during 2022-23 is estimated at 7.2 per cent as compared to 9.1 per cent in 2021-22," the statistics ministry said in a release.

"Nominal GDP or GDP at current prices in the year 2022-23 is estimated to attain a level of ₹272.41 lakh crore, as against ₹234.71 lakh crore in 2021-22, showing a growth rate of 16.1 percent," added the statistics ministry.

The agriculture sector witnessed a sharp up-tick in January-March, as its gross value added (GVA) growth jumped to 5.5 per cent from 4.7 per cent the previous quarter and 4.1 per cent in the first quarter of 2022. The manufacturing sector saw a sharp slowdown in growth to 1.3 per cent in FY23 compared to 11.1 per cent in the previous fiscal.

The construction sector also slowed down to 10 per cent growth in FY23 compared to 14.8 per cent in FY22. Additionally, public administration, defence and other services sector registered a growth of 7.2 per cent in FY23, moderating from 9.7 per cent in FY22.

Also, separate data revealed that government's fiscal deficit for FY23 narrowed to 6.4 per cent of gross domestic product (GDP), from a year earlier - and also met the government's target, supported by buoyant tax receipts and some fiscal headroom from lower payments.

"I think I can stick my neck out and say that when the revised numbers for FY23 are released next year, there might be an upward revision to the 7.2 percent GDP growth figure," Chief Economic Adviser V Anantha Nageswaran said, while briefing the reporters on the GDP data released by the NSO today.

CEA Nageswaran added that that the private consumption as a percentage of the gross domestic product was at a 16-year high in 2022-23. The double-digit growth in tractor sales bodes well for the agriculture sector, he said.

Separate government data revealed that the growth in eight core infrastructure industries moderated to 3.5 per cent in April on an annual basis after hitting a five-month low of 3.6 per cent in March due to a decline in the output of crude oil, natural gas, refinery products and electricity.

Meanwhile, according to the RBI’s annual report 2022-23 released on Tuesday, India’s GDP growth for 2023-24 was projected at 6.5 per cent amid softer global commodity and food prices, and good rabi crop prospects, among others. It said that domestic economic activity does face challenges from an uninspiring global outlook going forward, but resilient domestic macroeconomic and financial conditions expected dividends.

In third quarter, the Indian economy expanded by 4.4 per cent, lower than the previous quarter's growth rate of 6.3 per cent and slightly below market expectations of 4.6 per cent. Private spending, which accounted for a significant portion of GDP, slowed down due to higher borrowing costs.

"The higher-than-expected GDP growth in Q4 FY23 is a pleasant surprise and seems to have been driven by broad-based improvement in domestic drivers of private consumption, public consumption, and investments. Narrowing of external trade deficit also provided comfort. Clearly, the usual financial year-end growth momentum received a boost from a sharp decline in input price inflation along with higher government spending,'' said Vivek Kumar, Economist, Quanteco Research, Mumbai.

‘’Lead indicators for April 2023 are pointing towards continuation of growth momentum. While this is encouraging, the anticipated global economic slowdown and lagged impact of past aggressive monetary tightening by the Reserve Bank of India is likely to manifest in a lower headline GDP growth number of 6.6% in FY24 vis-a-vis 7.2% in FY23,'' added Kumar.