GDP data shows continued momentum, on track for 6.8-7% growth in FY23: CEA Nageswaran

CEA V Anantha Nageswaran (Illustration: Moneycontrol)

The Indian economy's performance in July-September shows it has maintained its momentum and the country is on track to grow by 6.8-7 percent in the current financial year, Chief Economic Adviser V Anantha Nageswaran said.

Speaking to reporters on November 30 following the release of GDP data for July-Sepember, Nageswaran said while a fall in the growth rate was expected due to the fading away of the base effect, the numbers show the economic recovery from the coronavirus pandemic has continued.

"This data confirms that the economic recovery continues and most components of economic growth are stabilising at a moderate pace and we are on track to deliver 6.8-7 percent GDP growth for the current financial year," Nageswaran said.

"And we can look ahead - as capacity utilisation rate picks up, as capital formation maintains its buoyancy, tax revenue growth indicates the vigour of economic activity, etc - to India building on its growth recovery further in 2023-24 as well," the government's top economist added.

Data relesed by the statistics ministry on November 30 showed India's GDP growth more than halved to 6.3 percent last quarter from 13.5 percent in April-June. This was in line with economists' expectations as well as the Reserve Bank of India's (RBI) own forecast.

The central bank has forecast that the GDP will grow by 7 percent in FY23.

While the overall GDP growth rate for July-September met expectations, the manufacturing sector disappointed after it contracted by 4.3 percent. However, Nageswaran argued that this was likely due to caution ahead of the festival season and the sector's performance should improve going ahead.

"That was probably a bit of a caution with respect to the festival season; manufacturers were probably reluctant to add too much to the inventory. Now that they have had a strong festive season and they are seeing that overall demand remains study, manufacturing sector outcomes should start to improve in the coming quarters," said Nageswaran.

The chief economic adviser further said that the latest GDP data showed India's growth trajectory "stands tall".

"And we should understand that these growth rates are happening in the context of tightening of global monetary conditions as well as the commodity price shocks… Therefore, India's growth performance becomes all the more creditable."

Nageswaran pointed out that several indicators, such as credit growth, showed the domestic economy was doing well.

"It (credit growth) is not just concentrated in one sector. Credit to MSMEs is particularly strong and that is gratifying… Clearly, there is a very strong momentum in credit growth and the demand from credit coming from all sectors points to continued economic momentum and growth continuing."