Thu. Mar 28th, 2024
Indian Economic Growth Slows to 4.4% in December Quarter; Full Year Outlook 7%Gross domestic product concept. Growth arrow chart with globe, stacks of money, happy tiny professional. Flat illustration for national economy, monetary policy, global finance topics

India’s GDP growth for the December quarter snailed to 4.4 percent, as per the data released by the Ministry of Statistics and Programme Implementation.

The third quarter GDP growth figure plunged from the 6.3 percent recorded in the previous quarter. At the same time, the December quarter figure came below estimates shared by economists.

Per MoSPI’s communique, the estimated real GDP in Q3 FY23 is Rs 40.19 lakh crore, down from Rs 38.51 lakh crore in Q3 FY22.

The growth in real GDP is estimated at 7.0 percent for FY23, while for FY22, it was 9.1 percent. Nominal GDP growth expectedly would be 15.9 percent for FY23 compared to 18.4 percent in FY22.

A poll of economists estimated the economy to grow 4.6 percent in the third quarter, off the back of high inflation and tightening monetary policies by the central banks.

The government data hints at a faster slowing down of the economy than expected. It raises concerns as to what turn the growth trajectory would take amid the unstable global economic situation. In addition, it also remains a question of what impact the ensuing heat waves would have on agriculture and related sectors.

Why The Brightness Of GDP Numbers Faded In December Quarter?

The Indian economy witnessed sluggish growth mainly due to a weak performance by the manufacturing sector, which shrunk by 1.1%, against 1.3% growth in the year-ago period.

The agriculture sector grew 3.7% in the third quarter compared with 2.2% a year ago. In the construction sector, growth was 8.4% as opposed to 0.2% last year, while the mining sector saw a growth of 3.7% against 5.4% last year.

The government predicts the economy to grow 7 percent in FY23, a tad higher than the Reserve Bank of India (RBI) prediction of 6.8 percent.

Notably, the economic growth would further dim in the fourth quarter of FY23, as the central bank has raised the key interest rate by 250 basis points since May 2022. Economists expect a further hike of 25 basis points to 6.75% in April before it pauses until year-end.

The fading pandemic-induced base effect, which contributed to higher growth in FY22, is another factor contributing to the weakening GDP growth.

By Harshita Sharma

I bring to you updates from business, policy and economy spectrum.

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