India's gross domestic product (GDP) grew at a slower pace at 4.1 per cent in the January- March quarter, according to the data released by Ministry of Statistics & Programme Implementation (MoSPI) on Tuesday. The slow growth is mostly due to soaring prices and the subsequent hit to consumer spending and investments, according to analysts.
"GDP at Constant (2011-12) Prices in Q4 2021-22 is estimated at Rs 40.78 lakh crore, as against Rs 39.18 lakh crore in Q4 2020-21, showing a growth of 4.1 percent," the government data said in a statement.
Furthermore, for the full fiscal year, the GDP is estimated to grow at 8.7 per cent in 2021-2022 as compared to a contraction of 6.6 per cent in 2020-21, the government data further added.
The country's GDP had expanded 20.1 per cent in the April-June quarter, 8.4 per cent in July-September and 5.4 per cent on October-December quarter of the financial year 2021-2022, mostly because of weak performances in the same quarters in 2020 when the pandemic took hold.
The country's Gross Value Added (GVA) for Q4FY22 stands at 3.9 per cent, while GVA for full fiscal year 2021-2022 stands at 8.1 per cent.
"While the readings have broadly come In line with expectations, the outlook remains clouded with uncertainties especially with escalating crude oil prices. Further, weak labor markets, limited ability on additional fiscal spends, reduced corporate margins due to rising input prices and weaker global demand remain a concern," said Upasna Bhardwaj, economist at Kotak Mahindra Bank.
“ ...So far in FY23, recovery in India’s domestic macros have been resilient to risks arising from global developments; however, supply side challenges and inflation spikes, which could dampen consumption and investments in the economy, poses near term risk to India’s economic growth," said Vivek Rathi, Director - Research, Knight Frank India.
Further, fiscal deficit for 2021-22 worked out to be 6.71 per cent of the gross domestic product (GDP), lower than 6.9 per cent projected by the Finance Ministry in the revised Budget Estimates, government data stated. The revenue deficit at the end of 2021-22 was 4.37 per cent.
India's combined index of Eight Core Industries grew by 8.4 per cent in April, compared to the same month last fiscal, driven by steel, cement, and natural gas, according to the data released by Ministry of Commerce & Industry today. The production of coal, electricity, refinery products, fertilizers, cement and natural gas industries increased in april 2022 over the corresponding period of last year, the data added.
Meanwhile, India’s benchmark 10-year bond yield touched a three-week high in early trade today as global crude oil prices rose further raising concerns over the need for the central bank to tighten monetary policy aggressively to contain inflation.The benchmark bond yield was trading at 7.46% by 0606 GMT, its highest since May 9.
The economy's near-term prospects have been darkened by a spike in retail inflation, which hit an eight-year high of 7.8 per cent in April. The surge in energy and commodity prices following the Ukraine crisis is also exerting a drag on economic activity.
Notably, after the off-cycle Monetary Policy Committee (MPC) meeting of RBI last week, RBI Governor Shaktikanta Das had said the adverse effects of the unprecedented high global food prices due to the ongoing geopolitical situation are reflected in the domestic market as well, and going forward inflationary pressures are likely to continue.
MPC had raised the key policy rate (repo) by 40 basis points to tame the rising inflation. It was the first-rate hike after August 2018.
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