The fall in GDP growth from 8.5 percent in July-September 2021 is due to the waning of the favourable base effect, although a reduction in the advance estimate for full-year growth from 9.2 percent is likely due to the hit to economic activity from the Omicron-variant led third COVID-19 wave.
India’s GDP growth slowed down to 5.4 percent in October-December 2021 from 8.5 percent in the previous quarter, data released on February 28 by the Ministry of Statistics and Programme Implementation showed.
The statistics ministry also said India’s GDP will likely grow by 8.9 percent in FY22, down from its first advance estimate of 9.2 percent, released in early January 2022.
The GDP growth rate of 5.4 percent for the third quarter of FY22 is below expectations. As per a Moneycontrol survey, the GDP was seen rising by 6.2 percent on a year-on-year basis last quarter.
Growth was expected to decline in the last quarter of 2021 as a favourable base effect waned, with the Indian economy having exited a technical recession in the corresponding period of FY21.
Like the GDP growth rate, growth in Gross Value Added (GVA) also slid in October-December 2021, coming in at 4.7 percent, down from 8.4 percent in July-September 2021. For the year as a whole, the statistics ministry has estimated GVA will post a growth of 8.3 percent.
| Oct-Dec 2021 growth | FY22 growth | |
| Real GDP | 5.4% | 8.9% |
| Nominal GDP | 15.7% | 19.4% |
| Real GVA | 4.7% | 8.3% |
| Agriculture, forestry, fishing | 2.6% | 3.3% |
| Mining, quarrying | 8.8% | 12.6% |
| Manufacturing | 0.2% | 10.5% |
| Construction | -2.8% | 10.0% |
| Trade, hotels, transport, etc | 6.1% | 11.6% |
| Financial, real estate, professional services | 4.6% | 4.3% |
| Public administration, defence, other services | 16.8% | 12.5% |
October-December 2021 saw all eight sectors record a lower rate of growth compared to last year, with the construction sector contracting by 2.8 percent.
In July-September 2021, the construction sector had grown by 8.2 percent.
The manufacturing sector also proved to be a drag last quarter, expanding by a mere 0.2 percent on a year-on-year basis.
However, for FY22 as a whole, the government’s second advance estimate showed the manufacturing and construction sectors are seen growing by 10.5 percent and 10.0 percent, respectively.
The second advance estimate suggests India’s GDP growth will slow down further to 4.8 percent in January-March 2022, data for which will be released on May 31.
