India’s Gross Domestic Product (GDP) for December 2022 quarter recorded a mediocre growth of 4.4 per cent as per reports from the Ministry of Statistics and Programme Implementation.
The latest report portrays a slowdown in the December quarter growth against an optimistic 6.3 per cent GDP growth from the previous quarter. The GDP for April-June 2022 was recorded at 13.2 per cent and is constantly falling ever since.
The Reserve Bank of India (RBI) has been constantly increasing the interest rate which could have an impact on the growth of the economy. In a bid to tame inflation, the RBI has increased interest rates by 250 basis points in consecutive Monetary Policy meetings.
The National Statistical Office report on February 28 forecasts the real GDP growth at 7% for 2023 which is higher than the conservative 6.1% estimation of the IMF. The report also had a correction in the GDP estimation for 2021-22 and has revised it to 9.1% against an 8.7% estimate.
The shrinkage in the output from the manufacturing sector is a factor in the slowdown of the Indian economy. The robust manufacturing sector witnessed a 1.1 contraction in the Dec. 2022 quarter compared to a 1.3% growth in the Dec. 2021 quarter.
The Chief Economic Adviser V Anantha Nageswaran said, “Manufacturing appears to have slowed down on the face of it due to rising input cost, but if you look at PMI (Purchasing Managers’ Index) indicators, the manufacturing sector is in good health and performance of the core sector in January tells us we do have a fairly robust manufacturing growth rate in the fourth quarter,” as reported by the Indian Express.
A Reuters report containing the poll of 42 economists on India’s GDP performance has estimated a grim performance with the estimated growth of 4.4% in FY23 taking the annual GDP tally for the financial year 2022-23 to 6%, lower than the estimates of IMF, RBI and the NSO data.
The optimistic 13.2 per cent GDP growth in the first quarter of FY2023 is being corrected as the market opens up in comparison to the high growth which was recorded, initially after the opening up after the Pandemic.
Apart from the contraction in the manufacturing sector, and flattening of exports, the agriculture sector recorded 3.7% growth in the third quarter compared to 2.4% in the second quarter of FY23. The mining sector recorded a growth of 3.7% in quarter 3 against the 0.4% growth of quarter 2.
The broad view of the analysts is that the recorded GDP is at par with the estimates and that the rising interest rates have impacted investment as well as consumption, adding to the slowing down of the economy.
© Vygr Media Private Limited 2022. All Rights Reserved.
