India’s GDP growth accelerated to 6.1% in the January to March 2023 quarter, lifting the economy’s uptick in 2022-23 to 7.2% from the 7% estimated earlier, according to the provisional national income data released by the National Statistical Office (NSO) on Wednesday.
The Gross Value Added (GVA) in the economy is reckoned to have risen 7% in 2022-23, compared to 8.8% in 2021-22, with manufacturing GVA growth sliding to just 1.3% from 11.1% a year ago, despite a 4.5% rebound in the final quarter after six months of contraction.
Economists noted that though several sectors delivered a positive surprise, especially in the last quarter of the year, consumption remained tepid and the overall growth pattern remains uneven.
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Agri, services growth
The farm and services sector buoyed economic outcomes as just three of eight broad economic activity segments recorded a higher GVA growth than in 2021-22.
The agricultural GVA grew 4%, up from 3.5% in the previous year. The financial, real estate and professional services sectors saw their GVA grow 7.1%, compared to 4.7% in 2021-22. The GVA of the trade, hotels, transport, and communication sectors, as well as services related to broadcasting grew 14%, marginally faster than in the previous year.
Revised GDP, GVA
The NSO also revised GDP and GVA numbers lower for the first half of last year, but bumped up the third quarter figures slightly. The first quarter’s GDP growth in 2022-23 is now pegged at 13.1%, followed by a 6.2% rise in the second quarter and 4.5% growth in the third, up from the 4.4% estimated in February.
In GVA terms, the final three months of 2022-23 recorded a three-quarter high of 6.5%. The growth estimates for the first and second quarters were pared to 11.9% and 5.4% respectively, while the third quarter GVA growth was revised higher to 4.7%, from the 4.6% reckoned earlier.
‘Muted consumption growth’
“While growth in private final consumption expenditure witnessed a slight uptick to 2.8% in Q4 from 2.2% in Q3, it remained muted, belying the uptick in consumer sentiments as per the RBI’s consumer confidence survey,” ICRA chief economist Aditi Nayar pointed out.
The higher-than-expected GDP growth last year could also temper growth expectations for this year, which the government and central bank expect to be around 6.5%, said Madan Sabnavis, the Bank of Baroda’s chief economist. Amid a global slowdown, maintaining growth over 6% will be challenging, he reckoned.
“The phenomenon of pent-up demand that lifted services through last year and this fiscal year’s first two months will not be strong, and private sector investment has to pick up. The two engines that need to fire would face that much more pressure, given that exports will not be contributing to growth this year,” cautioned Mr. Sabnavis.
‘Evenly balanced risks’
Chief Economic Advisor (CEA) V. Anantha Nageswaran was more optimistic and said the growth momentum continued across agriculture, industry and services sectors in the fourth quarter. India’s 6.1% GDP growth was the fastest among major economies in the fourth quarter, he asserted, adding that prospects look better for this year than they did four months ago.
“We are prepared to stick our necks out and say that the risks to a 6.5% growth projection for this year are more evenly balanced now, than at the time of the Economic Survey’s presentation when we felt that downside risks dominate,” Mr. Nageswaran said.
‘Economic resilience’
Prime Minister Narendra Modi said that the 2022-23 GDP growth figures underscored 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,” he said in a tweet.
“Exports of goods and services accounted for 23.5% of GDP, the highest since 2014-15, while private consumption hit the highest level since 2006-07 at 58.5% and gross fixed capital information, reflecting a sustained increase, is at the highest point since 2013-14 at 34% of GDP,” the CEA said.
GVA from the employment-intensive construction sector grew 10% in 2022-23, from 14.8% in 2021-22. Mining and quarrying GVA growth slowed to 4.6% from 7.1%. Electricity, gas, water supply and other utility services’ GVA rose 9%, only slightly slower than 9.9% in 2021-22. Public administration, defence and other services’ GVA grew 7.2% in 2022-23, compared to 9.7% in the previous year.
