India's GDP beats estimates, grows 4.1% in Q4: Highlights
8 min read 31 May 2022, 08:50 AM ISTEconomists have cut India's GDP growth forecast for 2022
PremiumThe National Statistical Office (NSO) has released the data for India's Gross Domestic Product (GDP) growth in the fourth quarter and full financial year 2021-22 on Tuesday.
Asia’s third largest economy had just begun recovering from the pandemic-induced slump when a surge in Omicron cases in January brought back some of the virus-related restrictions. The war in Ukraine, in February, further added to its woes, pushing up commodity prices and squeezing supplies further.
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CPI General index stood at 6.3% in Q4FY22 against 4.9% in Q4FY21.
In Q4FY22, total telephone subscribers contracted and stood at (-)2.9% against 2% in Q4FY22. Sales of commercial vehicles declined to 18.8% against 43.2% in Q4FY21, while the purchase of private vehicles witnessed a de-growth of 19.2% against 27.1% in Q4FY21. Cargo handled at airports stood at (-) 0.6% versus 6.8% in Q4FY21, and cargo handled at major seaports stood at (-)19.2% versus 27.1% in Q4FY21. Passengers handled at airports recorded a growth of 13.3% against (-) 35.5% in Q4FY21.
Production of rice grew 10.9% in Q4FY22 against 4.4% in Q4FY21. Production of coal surged 4.5% in Q4FY22 against (-)1.9% in Q4FY21.
In Q4FY22, production of crude oil narrowed to (-)2.7% versus (-)3.6% in Q4FY21. Production of cement slightly dipped to 9.3% versus 9.6% in Q4FY21. Consumption of steel declined steeply to 0.2% in Q4FY22 against 23.2% in Q4FY21.
Public administration, defence, and other services grew by 12.6% in 2021-22, against (-) 5.5% in 2020-21.
Financial, real estate, and professional services industry grew 4.2% in 2021-22 versus 2.2% in 2020-21.
Trade, hotels, transport, communication, and services related to broadcasting grew by 11.1% in 2021-22 against (-) 20.2% in 2020-21.
Construction industry recorded a growth of 11.5% in 2021-22 versus (-)7.3% of the previous fiscal.
Electricity, gas, water, supply, and other utility services recorded a strong growth of 7.5% against 3.6% in fiscal 2020-21.
Manufacturing industry recorded strong performance with a growth rate of 9.9% from (-)0.6% of the previous fiscal.
Mining and quarrying industry posted a growth of 11.5% in FY22 against (-)8.6% in FY21.
Agriculture, forestry and fishing industry recorded a growth of 3% in 2021-22 versus 3.3% in 2020-21.
India's gross domestic product (GDP) growth slows at 4.1% for the fourth quarter (January - March 2022) of FY22. The economic growth was hit by Omicron-led restrictions in January, global supply shortages, and higher input costs.
India's GDP growth is the slowest in the year, compared to the growth rate of 5.4% in the third quarter, 8.5% in the second quarter, and 20.3% in the first quarter of FY22.
Although, the country's economic growth slowed down, however, it surpassed analysts expectations.
Real GDP at Constant (2011-12) prices in the year FY22 is estimated to attain a level of ₹147.36 lakh crore, as against the First Revised Estimate of ₹135.58 lakh crore for the year 2020-21, released on January 31, 2022. The growth in GDP during 2021-22 is estimated at 8.7% as compared to a contraction of 6.6% in 2020-21, the Ministry of Statistics & Programme Implementation (MOSPI) said.
Nominal GDP at the current prices in the year 2021-22 is estimated to attain a level of ₹236.65 lakh crore, as against ₹198.01 lakh crore in 2020-21, showing a growth rate of 19.5%, MOSPI added.
Gross value added at basic prices stood at 8.1% in FY22 compared to (-)4.8% in the previous fiscal. GVA at basic prices is estimated to attain over ₹136.05 lakh crore higher compared to the first revised estimates of ₹125.85 lakh crore.
Private financial consumption expenditure stood at 56.9% in 2021-22, versus 57.3% in the first revised estimates of 2020-21. Government final consumption expenditure stood at 10.7% in 2021-22 versus 11.3% in 2020-21 (1st RE). Gross fixed capital formation was at 10.7% in 2021-22 against 30.5% of 2020-21 (1st RE).
India's revenue receipts stood at ₹21.68 lakh crore or 104.3% of the revised estimate for FY22, while the net tax revenue came in at 18.2 lakh crore, government data showed.
India's fiscal deficit for the financial year 2021-22 is estimated at Rs15.87 lakh crore or 99.7% of the revised target, government data showed Tuesday. Fiscal deficit, an indication of total borrowings by the government to make up for higher expenditure, stood at 6.7% of the gross domestic product (GDP) as against the revised budget estimate of 6.9%. In the budget last year, the government had initially pegged the fiscal deficit at 6.8% of the GDP.
The Ministry of Commerce & Industry today announced the data of combined Index of Eight Core Industries which increased at 8.4% in April 2022 compared to the same month a year ago. The production of Coal, Electricity, Refinery Products, Fertilizers, Cement and Natural Gas industries increased in April 2022 over the corresponding period of last year.
Reactions:
Suvodeep Rakshit Senior Economist at Kotak Institutional Equities said, "The 4QFY22 GDP growth print of 4.1% and GVA growth print of 3.9% was in line with expectations even as it indicated that the economy is seeing only a gradual recovery. From the expenditure side, private consumption as well as investment growth were muted in 4QFY22 which reflected in the production side with contraction in manufacturing and weak growth in construction as well as services. However, much of services, especially contact-based services, have picked up in 1QFY23. Growth in 1QFY23 will be high given a low base (1QFY22 GDP was hit by second Covid wave). Underlying growth trends remain mixed and recovery is yet to be fully broad-based. Nominal GDP growth at around 15% in 4QFY22 benefitted from high inflation. We expect FY2023 GDP growth to be around 7.3% with much of the growth being propped up by 1QFY23 print. While taming inflationary pressures will be the primary target, it is unlikely that policy makers will take their eyes of the growth trajectory, especially as recovery is gradual and uneven."
Upasna Bhardwaj, senior economist at Kotak Mahindra Bank said, “While the readings have broadly come In line with expectations, The outlook remains clouded with uncertainties especially with escalating crude oil prices. Further, weak labor markets, limited ability on additional fiscal spends, reduced corporate margins due to rising input prices and weaker global demand remain a concern."
Sujan Hajra, Chief Economist and Executive Director, Anand Rathi said, "The Q4 FY22 at 4.1% and FY22 GDP growth at 8.7% came marginally lower than our expectations. Moreover, the growth comes against the negative base of the pandemic year. Yet, there are several positive indicators as well. The rebound in capex in FY22 is the biggest positive. Even private consumption shows signs of improvement. But for large trade deficit and subdued increase in government consumption, GDP growth could be in double digits in FY22 and close to 8% in Q4 FY22. Despite the ongoing geopolitical uncertainties, supply disruptions, high commodity prices, inflation and monetary tightening, we expect India to continue to be the fastest growing major economy of the world in FY23 as well with 7.5% growth."
Garima Kapoor, Economist - Institutional Equities, Elara Capital said, "Going forward, while the continued normalization of contact-based service sector, revival in private capex on the back of PLI schemes and 'China plus 1' strategy, government's continued focus on capex and improved rural consumption owing to higher realizations in cultivation income will act as tailwinds, slowdown in global growth, elevated energy prices, rising interest rate cycle and tightening of financial conditions will be key headwinds."
Kapoor added, "Amid expectation of elevated energy prices through FY23E, we pare down our FY23E GDP growth expectation at 7.5% revised down from 7.8%."
Expectations:
Indian economy was seen to grew slower as soaring prices and the subsequent hit to consumer spending and investments are likely to further dampen the economy, as RBI faces a finely balanced struggle to tame inflation via rate hikes without hurting economic growth.
India's GDP was expected to grow by 4% in the January-March quarter from a year earlier, as per a Reuters poll, slowest pace in a year, following 5.4% growth in the previous quarter.
The State Bank of India's research team expected India's growth at 2.7% for the fourth quarter of FY22, while rating agency Icra sees 3.5% growth.
Meanwhile, GDP data, which is due to be released by the government today, is likely to show gross domestic product in the year to March 2022 grew 8.7% from a year ago, according to the median estimate in a Bloomberg survey, slower than the 8.9% expansion projected by the Statistics Ministry three months ago.
The economy had just begun recovering from the pandemic-induced slump when a surge in Omicron cases in January brought back some of the virus-related restrictions. The war in Ukraine, in February, further added to its woes, pushing up commodity prices and squeezing supplies further.
The economy's near-term prospects have been further impacted by a spike in its retail inflation (CPI), which hit an eight-year high of 7.8% in April.
In a surprise move, the Reserve Bank of India (RBI) Governor Shaktikanta Das raised the benchmark repo rate by 40 basis points earlier this month. The Governor said last week that the central bank's primary focus was to bring inflation closer to its target but it could not disregard concerns around growth.
Economists have revised down India's growth forecast for 2022 as rising energy which accounts for 55% of the economy - while most companies increasingly pass on rising input costs to consumers.
High-frequency indicators showed supply shortages and higher input prices were weighing on output in the mining, construction and manufacturing sector, even as credit growth has picked up and states are spending more.
Both inflation and the country's current account deficit will likely get worse due to broad-based price pressures and record-high commodity prices, as per economists.
