NEW DELHI: India’s gross domestic product (GDP) grew by 7.2 per cent in FY2022-23 against 9.1 per cent expansion in previous fiscal, as per the government data released on Wednesday.
Despite the rate of GDP growth coming at a slightly lower rate to the previous year, India remains one of the fastest-growing economies among major global players.
The GDP growth for FY2022-23 at 7.2% is higher than the 7% median estimate in a Bloomberg survey as well as the government’s forecast made three months ago.
The growth propelled the Indian economy to $3.3 trillion and set the stage for achieving $5 trillion target in the next few years.
The country’s GDP grew at 6.1 per cent in January-March 2023, the data showed. “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,” economist Vivek economist of Quanteco Research told the media.
In the same period, China’s economy expanded 4.5 per cent year-on-year according to its National Bureau of Statistics, while Washington’s Commerce Department said the United States grew by an anaemic 1.1 per cent.
China is rebounding after the end of zero-Covid measures that battered business and supply chains, but is bedevilled by a host of other headaches.
Meanwhile, the United States is battling persistently elevated inflation, Germany is in a technical recession amid an energy crisis triggered by the Ukraine war, and Japan expanded by just 0.4 per cent in the first quarter.
As per the data, the real GDP or GDP at constant (2011-12) prices in the year 2022-23 is estimated to attain a level of Rs 160.06 lakh crore, as against the first revised estimates of GDP for the year 2021-22 of Rs 149.26 lakh crore.
The growth is “far in excess of the overall expectations, driven primarily by a very rich growth” in the farm and services sectors, said Rupa Rege Nitsure, chief economist at L&T Finance. “Going by the high frequency indicators, this slowdown has primarily come from urban rather than rural belts. Improved farm sector conditions will help reduce the adverse impact of El Nino predicted for this year,” she added.
Services have emerged as a major driver of the economy, comprising more than half of the nation’s GDP. India has been gaining market share in information technology and business consulting work, boosting services activity to the highest in almost 13 years.
PM hails 2022-23 growth figures
Prime Minister Narendra Modi expressed satisfaction over the GDP numbers saying that the growth figures underscore the resilience of the Indian economy amidst global challenges.
“The 2022-23 GDP growth figures underscore the resilience of the Indian economy amidst global challenges. This robust performance along with overall optimism and compelling macro-economic indicators, exemplify the promising trajectory of our economy and the tenacity of our people,” PM Modi said on Twitter.
GDP growth gives RBI room to pause key rates
India’s resilient growth could reassure the Reserve Bank of India that its monetary tightening hasn’t taken a big toll on the economy and give it more room to pause for a second straight meeting on June 8. This is an outcome predicted by economists in a Bloomberg survey which sees rates on hold for the rest of the year before RBI starts lowering borrowing costs in 2024. The benchmark repo rate is currently at 6.5%
Key numbers from the GDP report:
*Agriculture rose 4%, mining was up 4.6%, manufacturing increased 1.3% last fiscal year
*Electricity +9%; construction +10%; trade, hotels and transport +14%;
*Financial services +7.1%; public administration +7.2%
*Government spending rose marginally 0.12%, consumption was up 7.5%
*Gross fixed capital formation, a proxy for investment, increased 11.4%
*Gross value added, a key measure of economic productivity, rose 6.5% in January-March from a year ago
What experts say on India’s GDP numbers
Upasana Bhardwaj, chief economist, Kotak Mahindra Bank
“The sharp upside to the GDP growth suggest the resilience of the Indian economy despite the global slowdown. However, we remain watchful on the sustainability of the strength especially when much of the non-agricultural growth has been led by public investment while consumption remain tepid.”
Sakshi Gupta, principal economist, HDFC bank
“The GDP growth surprised (by being) significantly higher than expected for the fourth quarter, taking the full-year number to 7.2% in 2022-23. Growth was led by higher-than-expected agriculture growth and strong growth in services. The GDP data does validate the recent growth optimism for India, despite global headwinds. This is not to say that the growth outlook is without risks – particularly in regards to the monsoon progress and recession risks globally. We expect GDP growth at 5.8%-6% for FY24 with some upside to this forecast now emerging.”
(With inputs from agencies)
