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Business News/ Economy / India's economy to expand at 7% in FY23; FY22 GDP growth rate revised to 9.1%

India's economy to expand at 7% in FY23; FY22 GDP growth rate revised to 9.1%

The government released the second advance estimate of the GDP (Gross Domestic Product) for 2022-23 along with December quarter data today

A spice vendor, center, speaks with customers at a market in New Delhi (Bloomberg)Premium
A spice vendor, center, speaks with customers at a market in New Delhi (Bloomberg)

India's GDP or gross domestic product may grow 7 per cent for financial year 2022-23, according to the second advance estimates released by the Ministry of Statistics and Programme Implementation Tuesday evening.

The ministry also released the revised estimate of economic growth for financial year 2021-22, at 9.1 per cent. It was estimated at 8.7 per cent in May last year.

The GDP growth was pegged at 7 per cent for 2022-23, according to the first advance estimates released last month. India's GDP had grown at 8.7% in the year ending 31 March, 2022.

Meanwhile, India's economic growth slowed down to 4.4 per cent in the third quarter of 2022-23 as a series of interest rate hikes by the country's central bank hurt demand and weakness in the manufacturing sector continued.

"India Q3 GDP rate of 4.4% is in line with RBI estimates and is below consensus estimates primarily due to an upward revision in the base. GVA during the quarter was up 20bps compared to the GDP. During the quarter private final consumption was not in line with expectations. Gross Fixed Capital Formation at over 8% however is encouraging," said S Ranganathan, Head of Research at LKP Securities.

In October-December 2021, the economy grew by 11.2 per cent and by 6.3 per cent in the July-September quarter last year, as per the data released by the National Statistical Office (NSO).

India's manufacturing sector shrank by 1.1% on-year in the quarter, a second straight contraction reflecting weakness in consumer demand and exports.

External demand was weak as central banks globally continued monetary tightening to tame inflation.

The data assumes significance since in December 2022, the Reserve Bank of India lowered the country's GDP growth forecast to 6.8 per cent for the current fiscal. It was cut from the earlier projection of 7 per cent.

The central bank has raised its benchmark repo rate by 250 basis points since May 2022 and economists expect a further rate hike of 25 basis points to 6.75% in April before it pauses until year end.

The sharp fall in the year-on-year growth rate is also partly due to a fading of pandemic-induced base effects which had contributed towards higher growth figures in fiscal 2021/22.

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Published: 28 Feb 2023, 05:58 PM IST
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