Manufacturing Lowers India’s GDP Growth To 4.4%

According to CEA, high-frequency indicators like automobile sales and PMI demonstrate growth.

Indian Economy and Growth. Indian National Flag. — Image Source : Deccan Herald

Statistics now

As per figures released by the National Statistical Office, India’s Gross Domestic Product (GDP) rate dropped to a three-quarter drop of 4.4% in October-December 2022-23. This was mostly due to a 1.1% drop in manufacturing as well as a drop in personal consumption demand and state spending.

The economy grew 6.3% in the July-September period and 6.3% in July-September, and 13 % in the April-June fiscal period. The 3.3% rate of increase in the third quarter was slower than the 6.3% pace of growth in the July-September quarter and the 13.2% growth rate in the April-June period. This was due to slower consumer spending and export markets, as well as increased input expense and rate of interest, while the Indian central bank wanted to concentrate on the “withdrawal of accommodation.”

NSO’s second advance assessments for the full fiscal year 2022-23 remain unchanged from their previous projection of 7% advancement. Updated statistics for past fiscal years were also issued, which made the annual growth for the financial year 2021-2022 go from 8.7 per cent to 9.1 per cent, an increase of 40 basis points. There was also an increase during the Covid duration. The GDP for 2020-21 is already thought to be (-) 5.8% instead of (-) 6.6%.

The final quarter GDP assessment of 5.1% is much significantly greater than the Reserve Bank of India’s (RBI) prediction of 4.2% for Q4 in its December review meeting (with an FY23 growth estimate of 6.8 per cent).

Notwithstanding the high-frequency records, the rate of growth in personal consumption expenses decreased substantially from October to December, falling to 2- 2.1 per cent from 10.8 per cent during the comparable period of the previous year and 8.8 per cent in the preceding quarter.

The implications of increasing input prices can be seen in the actuality that industrial production remained in the negative for a second straight quarter, coming in at (-)1.1 per cent during the time frame from October to December. This compares to (-)3.6 per cent in the period from April to June and 1.3 per cent advancement in the same time frame a year earlier.

A Difficult Quarter

On the surface, production has slowed to a crawl, according to Chief Economic Adviser V Anantha Nageswaran, however, there are sufficient high-frequency predictors depicting reasonably strong manufacturing activity. “Industrial production now seems to have scaled back on the face of it because of increasing input cost,” he made a point of saying, “however if you take a glance at PMI (Purchasing Managers’ Index) signs, the manufacturing industry is in decent shape.” He added that January’s output of the core sector indicates a surprisingly solid manufacturing rate of increase in the final quarter.

Time of Care

Quarter-over-quarter fluctuations, according to Nageswaran, are less meaningful and should be viewed with extreme care as they aren’t seasonally adjusted. Tightened financial markets globally, weather-related ambiguity, and global political variables all necessitate our being well-prepared. War broke out in 2022, so it’s possible that there won’t be a major shock in 2024–24 like there was in the first few months of that year, but “certain aspects of the underlying issues are still bubbling and we must remain vigilant,” he warned.