India’s GDP (gross domestic product) may grow 7% for financial year 2022-23, according to the first advance estimates released by the government Friday evening. The figures assume significance as they come ahead of the presentation of General Budget in Lok Sabha on 1 February, 2023. India’s GDP had grown at 8.7% in the year ending 31 March, 2022.
The country’s nominal GDP growth for FY23 is estimated at 15.4% as against 19.5% in FY22, the Ministry of Statistics & Programme Implementation said in a statement.
Meanwhile, the growth in gross value added (GVA) at basic prices is pegged at 6.7% this fiscal, down from 8.1% in 2021-22.
“Real GDP or GDP at Constant (2011-12) Prices in the year 2022-23 is estimated at ₹157.60 lakh crore, as against the Provisional Estimate of GDP for the year 2021-22 of ₹147.36 lakh crore, released on 31st May, 2022. The growth in real GDP during 2022-23 is estimated at 7.0% as compared to 8.7% in 2021-22,” the ministry said.
The output of the manufacturing sector is estimated to decelerate to 1.6% as against a growth of 9.9% in FY22 while construction growth may moderate to 9% in FY23 from 11.5% in FY22.
Similarly, mining sector growth is estimated at 2.4% in the current fiscal as against 11.5% in 2021-22.
“We believe that buoyant albeit mixed domestic consumption should help to stave off some of the pain arising from weak exports during this period. Contrary to our expectations, the NSO expects private final consumption expenditure to contract by 0.2% YoY in H2 FY2023. Further, it expects exports to rise by 11.9% in H2 FY2023, which we believe is unlikely, given the flagging external demand,” said Aditi Nayar, Chief Economist at ICRA.
Indian economy in a relative ‘bright spot’
India is in a relative “bright spot” in the world economy, but needs to leverage its existing strength in services exports and extend it to job-rich manufacturing exports, International Monetary Fund (IMF) Deputy Managing Director Antoinette Sayeh said today.
“Macroeconomic policies are responding to the significant headwinds, with fiscal policy measures supporting vulnerable groups and monetary policy addressing persistently high inflation.”
Last month, the Reserve Bank of India (RBI) had lowered the country’s GDP growth forecast to 6.8% for the current fiscal from 7%, citing continued geopolitical tensions and tightening of global financial conditions. The RBI had projected the real GDP growth for 2022-23 at 6.8%, with the third quarter at 4.4% and the fourth at 4.2%.
The GDP growth in the second quarter of the fiscal had slowed to 6.3% from 13.5% in the preceding three months.
In April, the RBI had cut the GDP growth estimate from 7.8% to 7.2%, and further lowered it to 7% in September, last year.
The IMF too had reduced India’s growth prediction for FY23 to 6.8% from 7.4% projected in July 2022.
The World Bank, however has raised India’s GDP forecast for the current fiscal to 6.9% from its earlier estimate of 6.5%.
The Asian Development Bank has kept India growth forecast unchanged at 7% for 2022-23.
India had a good start to the current financial year, with expectations that pent-up demand will drive recovery in Asia’s third-largest economy. However, the optimism quickly faded as an unprecedented monetary policy tightening by central banks to tamp down high inflation is pushing many advanced economies toward a recession, and is tempering growth in others.
The central bank, which has raised its benchmark rate by 225 basis points so far this fiscal, isn’t done with tightening yet. Several economists say the RBI will deliver another quarter-point of tightening at its next policy review on 8 February as core inflation remains sticky.
With agency inputs
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