India's GDP Growth Slows to 4.1% in March Quarter; Economy Grew at 8.7% in FY22

In its second advance estimate, the National Statistical Office had projected GDP growth during 2021-22 at 8.9%.

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New Delhi: India’s economic growth slowed to 4.1% year-on-year in the January-March quarter – the slowest pace in a year – amid rising risks from higher prices of crude oil and commodities after Russia’s invasion of Ukraine, official data showed on Tuesday, May 31.

In the third quarter of FY22, GDP growth slowed to 5.4% from 8.5% in the second quarter and 20.3% in the first quarter.

As per the data, the Indian economy expanded by 8.7% in 2021-22 against a 6.6% contraction in 2020-21.

The growth in the financial year 2021-22 stood at 8.7%.

In its second advance estimate, the National Statistical Office (NSO) had projected GDP growth during 2021-22 at 8.9%.

The 8.7% growth also falls way short of the Reserve Bank of India’s (RBI) estimation of 9.5% of GDP growth for 2021-22.

Also read: How the Rise of Global Inflation Will Play Out in Indian Politics

Experts’ views

Radhika Rao, senior economist, DBS Bank, Singapore told Reuters, “Fourth quarter of FY22 GDP growth eased to 4.1% y/y, with the sequential pace restrained by temporary mobility restrictions imposed back then, impact of inclement weather and, separately, high commodity prices on account of geopolitical risks, besides a high base.”

“We don’t expect this outcome to materially disrupt the central bank’s policy normalisation plans. This subdued reading is likely to be followed by a strong double-digit growth in June’22 quarter on base effects.”

“GDP growth for Q4 FY22 at 4.1% reflects the impact of the Omicron wave, higher input costs and a high base in certain sectors from last year. Manufacturing activity contracted while agriculture was the biggest support. The worrying part remains the private consumption which saw a decline in share in GDP in the fourth quarter,” Sakshi Gupta, principal economist, HDFC Bank, Gurugram.

“With rising inflationary pressures, consumption recovery remains under a cloud of uncertainty for FY23. We expect growth to print at 7.2% in the current fiscal. This GDP print does little to change our view that the RBI is likely to raise rates by 25 bps at the upcoming policy.”

(With agency inputs)