India’s economy grew 4.4% in the October-December quarter of the financial year 2022-23, in line with the expectations of economists and various financial institutions. 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 country's Gross Domestic Product (GDP) for Q2 (July-Sept) FY23 had moderated to 6.3%, while it had grown 13.5% in the first quarter of FY23. "GDP at constant (2011-12) prices in Q3 2022-23 is estimated at ₹40.19 lakh crore, as against ₹38.51 lakh crore in Q3 2021-22, showing a growth of 4.4%. GDP at current prices in Q3 2022-23 is estimated at ₹69.38 lakh crore, as against ₹62.39 lakh crore in Q3 2021-22, showing a growth of 11.2%," the data shared by the ministry of statistics showed on Tuesday.
The government says the growth in real GDP during 2022-23 is estimated at 7% as compared to 9.1% in 2021-22; the GDP for FY22 was revised upwards to 9.1% from 8.7% earlier. "Real GDP or GDP at Constant (2011-12) Prices in the year 2022-23 is estimated at ₹159.71 lakh crore, as against the First Revised Estimates of GDP for the year 2021-22 of ₹149.26 lakh crore."
The nominal GDP or GDP at current prices in the year 2022-23 is estimated to attain a level of ₹272.04 lakh crore against ₹234.71 lakh crore in 2021-22, showing a growth rate of 15.9%.
The GDP numbers, however, are largely in line with estimates of economists and financial institutions. The central bank earlier said it expects Q3 FY23 GDP growth at 4.4%, and slashed India’s GDP growth forecast for FY23 to 6.8%. "Headwinds emanating from protracted geopolitical tensions, global slowdown and tightening of global financial conditions will slow India’s GDP growth," the RBI said.
The RBI had hiked the repo rate by 25 basis points (bps) to 6.50% this month, while withdrawing the "accommodative stance" to tame high inflation. With this, the repo rate was hiked for the 6th time in a row.
The data based on SBI Artificial Neural Network (ANN) model -- developed with 30 high-frequency indicators -- had also shown India’s GDP would grow at 4.6% in Q3 FY23. The SBI Research report released last week said the FY23 GDP forecast could also see an upward revision from the current 6.8% towards 7%.
Ratings agency ICRA had also pegged India's GDP growth in Q3 FY23 at 5.1% owing to a base effect-led moderation from the 6.3% recorded in Q2 FY23. It said economic activity in Q3 FY23 remained distinctly uneven, amid the upsides offered by the robust demand for contact-intensive services and upbeat sentiment during the festive season.
The finance ministry in its January economic review released this month said despite high inflation, high-frequency indicators in December 2022 and January 2023 indicate the economy was on track to achieve 7% GDP growth in 2022-23. Due to the Centre's focus on "macroeconomic stability" in the last several years, the Indian economy faces the year ahead with "confidence", while being mindful of the risks, said the ministry's monthly economic review.