India remains fastest growing major economy, first quarter witnesses 13.5 per cent growth

One of the most resilient economies in the world during one of the most difficult times like last two years, The Indian economy has once again grown by 13.5 per cent during first quarter of the current financial year. The data released by the National Statistical Office (NSO) on Wednesday showed that the economic growth, which is also the fastest in last four quarters, was led mainly by the agriculture and services sectors.

The economy had grown by 20.1 per cent in same quarter during previous year, i.e. April-June, 2021-22. The gross domestic product (GDP) of India expanded by 8.4 per cent in July-September, 2021; 5.4 per cent in October-December, 2021; and 4.1 per cent in January-March, 2022. However, the first quarter growth of the GDP at 13.5 per cent is little less than the projection of the Reserve bank of India (RBI), which expected it growing by 16.2 per cent earlier last month.

Commenting over the latest data, Finance Secretary TV Somanathan said that the economy was on course for over 7 per cent growth rate in the current fiscal year.

"Real GDP or Gross Domestic Product (GDP) at Constant (2011-12) Prices in Q1 2022-23 is estimated to attain a level of Rs 36.85 lakh crore, as against Rs 32.46 lakh crore in Q1 2021-22, showing a growth of 13.5 per cent as compared to 20.1 per cent in Q1 2021-22," the NSO statement said.

improvement quite visible : PHDCCI

The GDP has registered an inspiring growth rate of 13.5% in Q1 FY 2022-23 on the back of improved consumer, business and investor sentiments, rejuvenated demand for contact intensive services, record level of GST collections and railway freight and continuous facilitative efforts and measures of the Government, despite the geo-political scenario over the quarter, said Pradeep Multani, President, PHD Chamber of Commerce and Industry.
 
The GDP growth rate for Q1 FY 2023 stands at 13.5% as compared to 20.1% in Q1 FY 2022, said Multani adding that the industry body was looking forward to a continued handholding by the Government to mitigate the impact of recent geo-political developments for achieving strong and sustainable economic growth in the coming months while maintaining the inflation within the target band.

According to the NSO, the real GDP in absolute terms stood at Rs 27.03 lakh crore in the April-June quarter in 2020. It had contracted by 23.8 per cent in the first quarter of 2020-21 on account of lockdown restrictions to curb the spread of coronavirus.

As per the data, Gross Value Added (GVA) grew by 12.7 per cent to Rs 34.41 lakh crore during April-June this year. The GVA growth in the farm sector accelerated to 4.5 per cent in the quarter under consideration compared to 2.2 per cent a year ago. However, the GVA growth in the manufacturing sector decelerated sharply to 4.8 per cent during the quarter from 49 per cent during same quarter last year.

Construction sector under pressure

The NSO data showed that GVA growth in mining fell down to 6.5 per cent in the first quarter of current fiscal compared to 18 per cent during same quarter of previous fiscal year. The GVA in the construction sector also decelerated to 16.8 per cent in the quarter from 71.3 per cent.The electricity, gas, water supply and other utility services segment grew by 14.7 per cent in the quarter compared to 13.8 per cent a year ago.

GVA growth in the services sector including trade, hotel, transport, communication and services related to broadcasting was 25.7 per cent during the first quarter against 34.3 per cent. The data showed that financial, real estate and professional services grew by 9.2 per cent in the first quarter over 2.3 per cent earlier.

Public administration, defence and other services posted 26.3 per cent growth against 6.2 per cent in the first quarter of last fiscal. The NSO stated that the Nominal GDP or GDP at Current Prices in Q1 2022-23 is estimated at Rs 64.95 lakh crore against Rs 51.27 lakh crore in Q1 2021-22, showing a growth of 26.7 per cent compared to 32.4 per cent a year ago.

Moody’s Cuts Growth Forecast

Meanwhile, Moody's Investors Service has cut down India's GDP growth expectations from 8.3% in 2021 to 7.7% in 2022. The agency also expects it to decelerate further to 5.2% in 2023. In March, Moody's had forecast that India's economy could expand at 8.8% in current year.  

Moody’s in its latest paper said, “Although inflation eased slightly to 6.7% in July, it remains above the central bank’s target range of 2%-6% for the seventh straight month. The RBI forecasts that the inflation rate will remain high into 2023, at 5.8% in the January–March period and 5.0% in April–May. In August, the RBI raised the policy repo rate for a third time by 50 bps to 5.4%. The central bank is likely to remain hawkish this year and maintain a reasonably tight policy stance in 2023 to prevent domestic inflationary pressures from building further."