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India’s GDP Expands 5.4% in Third Quarter, Estimated to Rise 8.9% in FY22

India’s Gross Domestic Product (GDP) has grown by 5.4 per cent in the third quarter of the financial year compared with growth of 8.4 per cent in the previous quarter, as per the data released by the National Statistical Office (NSO). Recovering from the severe impact of Covid-19 in the last fiscal, the GDP grew by 8.4 per cent in the July-September quarter (Q2) and by a sharp 20.1 per cent in the April-June quarter (Q1).

The NSO’s second advance estimates for FY22 pegged the current fiscal year’s real gross domestic product (real GDP) growth at 8.9 per cent, compared with 9.2 per cent projected in the first advance estimates.

“Real GDP or Gross Domestic Product (GDP) at Constant (2011-12) Prices in the year 2021-22 is estimated to attain a level of Rs 147.72 trillion, as against the First Revised Estimate of GDP for the year 2020-21 of Rs 135.58 trillion, released on 31.01.2022,” said MoSPI.

India, Asia’s third-largest economy has now posted the fifth consecutive growth of positive growth. The growth albeit, is slower than previous two quarters, amid rising risks from higher prices of crude oil and commodities after Russia’s invasion of Ukraine.

“The pace at which India’s GDP grew in the Oct-Dec quarter shows an economy tentatively recovering from the pandemic, and one that is still grappling with supply constraints and commodity price increases in manufacturing, lack of both rural demand and private consumption. Overall expected FY 22 growth will now only get us to pre- pandemic absolute GDP levels, versus ahead of it as earlier expected, validating RBI’s persistence with an accommodative policy stance which is so essential for growth. Impact of infra push, PLI led capex, lag impact of reforms and pandemic receding are reasons to be optimistic about medium term growth, with oil price rise being the one thing that could blow our hopes,” said Vishesh C. Chandiok, CEO- Grant Thornton Bharat.

Gross Value Added (GVA) grew by 4.7 per cent YoY. In the previous quarter, GVA had increased by 8.4 per cent YoY. At the same time, the nominal GDP grew by 15.7 per cent. In the previous quarter, it had increased by 19.3 per cent.

The Reserve Bank of India has pegged India to grow at 9.2 per cent for current financial year.

 The central government’s fiscal deficit at end-January worked out at 58.9 per cent of the annual budget target for 2021-22, according to official data released on Monday. The fiscal deficit was 66.8 per cent of Revised Estimate (RE) of 2020-21 during the corresponding period of the last fiscal. The pace of growth of Indian economy slowed in October-December period on account of steadily rising retail inflation and rapidly slowing pace of industrial production.

Consumer price index-based (CPI) inflation steadily rose from 4.48 per cent in October to 5.59 per cent in December while factory output, measured by index of industrial production, fell to 10-month low of 0.4 per cent in December from growth of 3.2 per cent in October.

Rumki Majumdar, Economist, Deloitte India, said: “New uncertainties because of geopolitical conflicts could impact the growth outlook. The biggest worry would be inflation because of skyrocketing oil prices. This could undermine the stability of growth. Rising inflation and falling stock market indices may weigh on consumer sentiments and their purchasing power. A possible policy rate hike by the RBI could impact the credit growth cycle, which had been improving lately.”

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