The fiscal year 2021-22 gross capital formation has jumped the highest since FY06, and the gross capital formation in agriculture, manufacturing, electricity, trade & hotels, real estate, public administration and other services sectors registered a new peak in FY22 after dipping during the pandemic, SBI Research says in its latest report.

With India’s economy growing 4.4% in Q3 (October-December) FY23 after 6.3% growth in Q2 and 13.2% growth in Q1, the Q4 GDP growth is derived at 5.1% as the full-year growth is expected to increase by 7% and GVA (Gross Value Added) growth by 6.6%, the report notes.

The further moderation in GDP is seen in the light of the Reserve Bank of India's (RBI) aggressive rate hike stance to contain high inflation levels. The slowdown in exports and low consumer demand also contributed to low GDP growth in the said quarter.

The Centre has also revised both yearly and quarterly past growth numbers. With this, the real economic growth for FY20, FY21 and FY22 have been revised upwards by 20 bps, 77 bps, and 42 bps, respectively.

The huge revisions in FY21 growth are primarily due to substantial upward revisions in manufacturing growth (+351 bps) and construction (+239 bps). "Manufacturing and construction sectors were not so much impacted during the pandemic. In rupees terms the revision accounted for an increase of Rs 98,000 crore in both these sectors," the SBI report said.

However, the seasonally adjusted real GDP growth series shows a modest dip in economic momentum, with a decline in growth at -0.7% QoQ in Q3 FY23 compared to 1.2% QoQ in Q3 FY22 and -2.1% QoQ in Q2 FY23.

There have been large revisions in the quarterly number of FY21. GDP growth of Q2, Q3, and Q4 FY21 has been revised upwards by more than 90 bps. However, the GDP growth of Q3 and Q4 of FY22 were revised downwards. In respect of the current fiscal, the Q1 FY23 GDP growth was revised downwards by 32 bps. "Due to upward revision in FY22 GDP numbers (by 42 bps), the fiscal deficit of FY23 as % of GDP will now be revised upwards to 6.5% from 6.4% of GDP," the report adds.

For FY24, there will be no change in fiscal deficit due to revisions. The sectoral GVA indicate, says SBI, all the sectors have crossed the pre-covid level.

The SBI report says the recent news of El Nino is not concerning. “Looking at the relation between El Nino and Indian droughts since 1950, it is observed that India faced 13 droughts, and 10 of these were in El Niño years and one in a La Niña years. This indicates that there may not be a one-to-one correspondence between El Niño and Indian droughts. The FY24 GDP growth is likely to be higher than the threshold of 6%.”

The report says with the government's efforts to ensure the quality of life for all citizens and stopped leakage of benefits through DBT, the per capita GDP at current prices is estimated at ₹1,96,716, compared to ₹71,609 in FY12 with a CAGR growth of 10.6%. In constant prices, too, the per capita GDP has increased to ₹1,09,060 in FY23.”

The report says despite unpaid domestic work being an indispensable factor contributing to the well-being of the economy, keeping them out of ‘economic activities’ put unpaid domestic work under the shadow of invisibility. “The total contribution of unpaid women to the economy is around ₹22.7 lakh crore (Rural: ₹14.7 lakh crore and Urban: ₹8.0 lakh crore), which is almost 7.5% of India’s GDP.”

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