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India Q4 GDP Highlights | The country's gross domestic product is estimated to have grown by 8.7 percent in FY22 after growth slid to 4.1 percent in the January-March quarter, as per the data released on May 31 by the Ministry of Statistics and Programme Implementation.
Growth likely slowed down in the first quarter of 2022 because of the hit to activity from the Omicron variant-led third COVID-19 wave and the Russia-Ukraine war.
The high growth figure, for FY22,
The economy's near-term prospects have been darkened by a spike in retail inflation, which hit an eight-year high of 7.8% in April. The surge in energy and commodity prices following the Ukraine crisis is also exerting a drag on economic activity.
The Reserve Bank of India (RBI) raised the benchmark repo rate by 40 basis points in an unscheduled meeting early this month.
Economists have revised down India's growth forecast for 2022 as rising energy and food prices have hit consumer spending - which accounts for 55% of the economy - while most companies increasingly pass on rising input costs to consumers.
"The rise in crude oil, food and fertiliser prices will weigh on household finances and spending in the months ahead," Moody's, the rating agency, said in a note. It has cut India's growth forecast to 8.8% from 9.1% for the 2022 calendar year.
The rupee's nearly 4% depreciation against the dollar this year has also made imported items costlier, prompting the federal government to restrict wheat and sugar exports and cut fuel taxes, joining the RBI in the battle against inflation.
High-frequency indicators showed supply shortages and higher input prices were weighing on output in the mining, construction and manufacturing sector, even as credit growth has picked up and states are spending more.
Indian consumer sentiment slid in early May, dipping for the second month in a row, as rising fuel prices and broader inflation hit household finances, according to a Refinitiv Ipsos Indian survey.
Unemployment rose to 7.83% in April from 7.57% in March, according to the Centre for Monitoring Indian Economy, a Mumbai-based private think tank.
RBI Governor Shaktikanta Das said last week that the central bank's primary focus was to bring inflation closer to its target but it could not disregard concerns around growth.
With Reuters inputs
Peak impact of interest rate hikes on GDP to be felt towards end of this fiscal, says CRISIL chief economist
Barclays India revises FY23 growth forecast to 7%
Manufacturing contraction in Jan-Mar an aberration: CEA
Interest rates becoming normal need not be anti-growth move: CEA
Stagflationary risks for India quite low compared to the rest of the world: CEA
FY22 gross fixed cap formation growth at 15.8% vs -10.4% (YoY)
Services, Industries key drivers of growth in Q4
Real GDP estimated to attain level of stimated to attain level of Rs 147.36 lakh crore
At 8.7%, India's estimated real growth for FY22 is the highest in at least 17 years for which comparable data is available
Q4FY22 Growth In A Snapshot
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"Peak impact of interest rate hikes on GDP will be felt only towards the end of this fiscal year. I see support to growth from a strong bounce-back in contact-based services, which last fiscal was about 11.3% lower than fiscal 2020 levels. But headwinds from slower global growth and higher oil prices have tilted the risks -- to our forecast of 7.3% for the current fiscal -- downwards,"said Dharmakirti Joshi, Chief Economist, CRISIL Ltd.
"Growth slowed down to 4.1% in Q1 22 as a combination of Omicron-driven restrictions on movement and base effects weighed on the GDP print. We revise down our FY22-23 growth forecast to 7.0%, acknowledging the downside risks to growth," Barclays India said.
Sujan Hajra of Anand Rathi Shares & Stock Brokers soundedoptimistic on the GDP numbers, sayingthere were "several positive indicators" in the data.
"The rebound in capex in FY22 is the biggest positive. Even private consumption shows signs of improvement. But for large trade deficit and subdued increase in government consumption, GDP growth could be in double digits in FY22 and close to 8 percent in Q4 FY22," Hajra noted.
According to Suvodeep Rakshit, senior economist at Kotak Institutional Equities, the underlying GDP numbersare indicative of only a gradual recovery.
"From the expenditure side, private consumption as well as investment growth were muted in Q4 FY22 which reflected in the production side with contraction in manufacturing and weak growth in construction as well as services," Rakshit noted.
At 8.7 percent, a favourable base effect helped propelIndia's FY22 GDP growth rate tothe highest in at least 17 years. But the huge statistical influence means it is more important than ever to look at the numbers that lie beneath the headline. Here's what experts have to say.
| BREAKDOWN OF OVERALL AND SECTORAL GROWTH NUMBERS | |||
| FY22 | FY21 | Jan-Mar 2022 | |
| Real GDP | 8.7% | -6.6% | 4.1% |
| Nominal GDP | 19.5% | -1.4% | 14.9% |
| Real GVA | 8.1% | -4.8% | 3.9% |
| Agriculture, forestry, fishing | 3.0% | 3.3% | 4.1% |
| Mining and quarrying | 11.5% | -8.6% | 6.7% |
| Manufacturing | 9.9% | -0.6% | -0.2% |
| Electricity, gas, other utilities | 7.5% | -3.6% | 4.5% |
| Construction | 11.5% | -7.3% | 2.0% |
| Trade, hotels, transport, etc | 11.1% | -20.2% | 5.3% |
| Financial, real estate, professsional services | 4.2% | 2.2% | 4.3% |
| Public administration, defence, other services | 12.6% | -5.5% | 7.7% |
Manufacturing contraction in January-March quarter is an aberration, the CEA said. The manufacturing sector contracted by 0.2 percent as compared to the same period last year.
According to the chief economic adviser, a robust response the is expected from private sector in second halfwhen global risks dissipate. Currently,global monetary tightening andrisk of commodity prices going up posechallenges to economy, he added.
Managing the troika of growth, inflation, fiscal balance is a challenge for all economies, Nageswaran noted.
Interest rates becoming normal need not be anti-growth move,the CEA said, adding that the central bank’s confidence to raise rates signalthat "recovery is taking root".
The financial sector in far better health than before, and external sector has also improved,he further noted.
