India GDP Data Beats Expectations – Stays Fastest Growing Economy

According to official numbers issued on Wednesday, India’s GDP increased by 6.1 per cent in the fourth quarter of 2022-2023, raising the annual growth rate to 7.2 per cent from...

Zaheer Hussain
June 2, 2023
1,293

According to official numbers issued on Wednesday, India’s GDP increased by 6.1 per cent in the fourth quarter of 2022-2023, raising the annual growth rate to 7.2 per cent from 9.1 per cent in the previous fiscal. India is expected to grow at a 7.2% annual rate in FY23. India’s extraordinary growth rates of 7.2% in FY23 and 6.1% in Q4 demonstrate that its economic narrative is evolving. Meanwhile, the eight key industries grew by 3.5% in April, compared to 3.6% (MoM) and 10.4% (YoY). The following are market analysts’ reactions to GDP numbers.

Why In The News?

The Indian Economy Grew At A Rate Of 6.1 Per Cent In The Final Quarter Of The Previous Fiscal, Likely Pushing The Overall Growth Rate To 7.2 Per Cent For FY23, Data Showed On Wednesday. While Analysts Were Pleasantly Surprised With The Strong Growth Rate, They Also Warned Of An Uneven Terrain Ahead.
Growth Rates Came In Higher Than Analyst Expectations Boosted By Government And Private Capital Spending Even As Private Consumption Remained Sluggish.

Key Takeaways:

The Growth Of The Eight Core Industries In April Was 3.5% Instead Of 3.6% (MoM) And 10.4% (YoY).
The Gross Value Added (GVA) Growth In The Manufacturing Sector Accelerated To 4.5% In The March Quarter As Against 0.6 Per Cent A Year Ago.
GVA Growth In The Mining Sector Was 4.3 Per Cent In The Fourth Quarter Compared To 2.3 Per Cent In The Same Quarter Of The Previous Fiscal. The Construction Sector Grew 10.4 Per Cent In The March Quarter, Up From 4.9 Per Cent In The Corresponding Period Of 2021-22.
The Agriculture Sector Growth Accelerated To 5.5 Per Cent From 4.1 Per Cent. However, There Was A Decline In Both Exports And Imports, Clouding The Economic Outlook.
Barring any Monsoon-related Risks Or Geopolitical Uncertainties, India’s Economy May Surpass The Initial Estimate Of 6.5 Per Cent Growth For The Current Fiscal Year (April 2023 To March 2024).
Private Consumption, Which Accounts For Nearly 60% Of The Economy, Grew 2.8% Year-on-year Compared With A Revised 2.2% In The Previous Quarter, While Capital Formation, An Indicator Of Investment, Rose 8.9% From A Downwardly Revised 8%.
Federal Government Spending, Constituting About 10% Of GDP, Rose 2.3% Year-on-year In The Latest Quarter, Compared With A Revised 0.6% Contraction In The Previous Quarter.

India GDP Data Beats Expectations Stays Fastest Growing Economy 2

What do Experts Think?

Aditi Nayar, Chief Economist, ICRA:
- GDP Expansion In Q4 FY2023 Was Appreciably Higher Than Expected While Remaining Uneven And Confirming The Hopes Of A Sequential Pickup In The Pace Of Growth Of Economic Activity To 6.1 Per Cent From The Bottom Of 4.5 Per Cent Seen In Q3 FY2023.
Sakshi Gupta, Principal Economist, HDFC Bank:
- GDP Growth Surprised Coming In Significantly Higher Than Expected For The Fourth Quarter, Taking The Full-year Number To 7.2 Per Cent In 2022-23. Growth Was Led By Higher-than-expected Agriculture Growth And Strong Growth In-Services. Almost 70 Per Cent Of The Growth Increase Came From The Services Sector Alone.

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