India’s GDP growth slows by 4.1% in the fourth quarter of FY22. Meanwhile, the overall growth recorded for the financial year 2021-22 is estimated at 8.7% as against the contraction of 6.6% in FY21.
According to official statistics released on Tuesday, May 31, India’s economic growth fell to 4.1 percent year-on-year in the January-March quarter, the weakest pace in a year, despite mounting threats from increased crude oil and commodity prices following Russia’s invasion of Ukraine.
GDP growth dropped to 5.4 percent in the third quarter of FY22, down from 8.5 percent in the second quarter and 20.3 percent in the first.
According to the statistics, the Indian GDP grew by 8.7% in 2021-22, compared to a 6.6 percent decrease in 2020-21.
The growth rate in the financial year 2021-22 was 8.7%.
The National Statistical Office (NSO) estimated GDP growth of 8.9% in 2021-22 in its second advance estimate.
The 8.7% growth rate also falls short of the Reserve Bank of India‘s (RBI) 9.5 percent GDP growth forecast for 2021-22.
Experts’ views
According to Radhika Rao, senior economist at DBS Bank in Singapore, “fourth quarter FY22 GDP growth slipped to 4.1% y/y, with the sequential pace constrained by temporary mobility limitations imposed at the time, the impact of inclement weather, and, separately, high commodity prices due to geopolitical threats, in addition to a high base.”
“This conclusion won’t have a big impact on the central bank’s policy normalization efforts.” Based on historical trends, we anticipate double-digit growth in June ’22.”
“The 4.1% growth in the fourth quarter of FY22 is a result of the Omicron wave, rising input costs, and a high base in certain industries.”
Manufacturing activity fell, but agriculture provided the most help.
The most concerning aspect is the drop in private spending as a proportion of GDP in the fourth quarter,” says Sakshi Gupta, chief economist at HDFC Bank in Gurugram.
“With rising prices, the spending rebound in FY23 looks iffy.” 7.2 percent growth is predicted for the current fiscal year.
This GDP report adds little to our belief that the RBI would raise rates by 25 basis points at its next policy meeting.”
