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India has posted a GDP growth of 6.1 percent in the January-March period as against 4.4 percent in the preceding quarter. For the entire FY23, the growth rate came in at 7.2 percent, which is higher than the estimates of 7 percent, but slower as compared to 9.1 percent clocked in FY22.
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"The 2022-23 GDP growth figures underscore the resilience of the Indian economy amidst global challenges. This robust performance along with overall optimism and compelling macro-economic indicators, exemplify the promising trajectory of our economy and the tenacity of our people," Prime Minister Narendra Modi tweeted.
"India's January-March 2023 GDP growth posted a sharp upside surprise, amongst the strongest lift for the quarter in Asia and displaying resilience in the face of negative terms of trade shock as well as a difficult global geopolitical backdrop last year. There was broad-based lift amongst the segments, especially stronger outturns by farm and services output. On the expenditure end, capital formation was one of the key support pillars, while private consumption grew at a more moderate pace. Double-digit nominal GDP growth of 16% was supportive of deficit and debt-to-GDP ratios. A strong GDP beat will provide the central bank headroom to extend its pause in June," saidRadhika Rao, senior economist, DBS Bank, Singapore.
“On balance, it seems that the economy has been holding up better than we had been expecting. Looking ahead, we expect a slowdown in growth in q/q terms over the coming few quarters. After all, lending rates are still drifting upwards, fiscal policy will turn slightly less supportive, and the external backdrop is weak. Even so, the strength at the start of the year means we now expect the economy to grow by 6.3% in 2023, from 6.0% previously," saidShilan Shah, Deputy Chief EM Economist, Capital Economics.
While India's growth numbers for the January-March period, as well as the entire FY23 show that the country remains a bright spot in the world economy, the recessionary trends in some of the advanced economies, however, suggest that the current growth momentum "could come under pressure going forward",EEPC India Chairman Arun Kumar Garodia said.
"We have already seen India's goods exports slowing down. As a result of subdued demand from major markets, engineering goods exports have been in the negative zone for some months. Although we remain optimistic it will be early to expect a strong rebound in demand from these markets. We hope that robust domestic demand would support the engineering sector by negating some of the adverse effects of global slowdown," Garodia added.
“Some moderation in growth is expected in FY24 given the uncertainty of the monsoon and as the global economy is facing challenges. However, it may not be severe. Our expectation is around 6 percent real GDP growth for FY24. Demand, financing conditions and external demand might not be so supportive,"said Soumyajit Niyogi, Director, Core Analytical Group at India Ratings & Research.
"We are now prepared to say that risks to our GDP growth forecast of 6.5 percent for 2023-24 are now more evenly balanced than a few months ago when downside risks to the forecast were greater," CEA Nageswaran told reporters.
"India is on track to achieve the fiscal deficit target of 5.9 percent of GDP in 2023-24," Chief Economic Adviser V Anantha Nageswaran said. The fiscal deficit target of 6.4 percent of the GDP was successfully met in FY23, as per the data released today.
"There is a very high chance CPI inflation will return to RBI’s medium-term target of 4 percent in 2023-24," Chief Economic AdviserV Anantha Nageswaran said, while briefing the press. The inflation rate had soared up in the post-pandemic period and following the outbreak of Russia-Ukraine war, but has now relatively cooled off. The retail inflation rate had came in at 4.7 percent, an 18-month-low, in April.
"We are seeing indications of strong recovery in rural demand," the chief economic adviser said, while addressing the press following the release of the GDP data. The agricultural sector, which forms the backbone of the rural economy, grew at 5.5 percent in the fourth quarter of FY23.
The capacity utilisation has already crossed 75 percent in several sectors, Chief Economic Adviser V Anantha Nageswaran said, while commenting on the GDP data for FY23.
The CEA, while briefing the reporters, also pointed out that total employment in the hotel industry was 40 million before the pandemic. This fell to 29 million during the pandemic but has now increased to 45 million.
Chief Economic Adviser V Anantha Nageswaran told reporters that private consumption as a percentage of the gross domestic productwas at a 16-year high in 2022-23. The double-digit growth in tractor sales bodes well for the agriculture sector, he added.
