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India's Q2FY23 GDP growth slows to 6.3%: Govt data

India's Q2FY23 GDP growth slows to 6.3%: Govt data

India's Q1FY23 GDP growth was 13.5% and the economic growth was 8.4% in the year-ago period

Photo: Reuters Photo: Reuters

Indian economy returned to a more normal 6.3% annual growth rate in July-September after double-digit expansion in the previous quarter, showed government data on Wednesday.

In April-June, Asia's third-largest economy showed explosive growth of 13.5% from a year earlier thanks mainly to the corresponding period in 2021 having been depressed by pandemic-control restrictions. The gross domestic product (GDP) had expanded by 8.4% in the July-September quarter of 2021-22, according to data released by the National Statistical Office (NSO).

As per the data, Gross Value Added (GVA) for Q2FY23 slowed to 5.6% as against 12.7% in Q1FY23 and 8.3% in Q2FY22.

Among key sectors, agricultural output rose 4.6% while manufacturing fell 4.3% and the employment-generating construction sector saw a 6.6% annual increase in activity.

GVA in mining also declined by 2.8 per cent in the quarter compared to 14.5 per cent growth. The GVA growth in the construction sector also decelerated to 6.6 per cent in the quarter from 8.1 per cent.

The electricity, gas, water supply and other utility services segment grew by 5.6 per cent in the quarter compared to 8.5 per cent a year ago. GVA growth in the services sector -- trade, hotel, transport, communication and services related to broadcasting -- was 14.7 per cent during the second quarter against 9.6 per cent.

With the Reserve Bank of India (RBI) now raising interest rates to tamp inflation running above its target range of 2% to 6% target, the economy is set to slow further. 

"Real GDP or GDP at Constant (2011-12) Prices in Q2 2022-23 is estimated at Rs 38.17 lakh crore, as against Rs 35.89 lakh crore in Q2 2021-22, showing a growth of 6.3 per cent as compared to 8.4 per cent in Q2 2021-22," the NSO statement said.

The real GDP in absolute terms stood at Rs 33.10 lakh crore in the July-September quarter of 2020. It had contracted by 6.6 per cent in the second quarter of 2020-21 on account of the staggering impact of lockdown restrictions to curb the spread of coronavirus.

Earlier this month, in an article published in the RBI bulletin, the GDP growth was pegged at 6.1% to 6.3% in the second quarter of this fiscal year.

China registered an economic growth rate of 3.9% in July-September, 2022.

After the announcement of GDP numbers, Chief Economic Adviser ‎V Anantha Nageswaran said "India’s growth trajectory is tall and better than other countries."

Private consumption growth has rebounded. There are positive signs of private investment picking up. Can see indirectly stability coming through rural economy," said Nageswaran at a press conference. 

Inflation peak in India happened in April, current inflation is rate well below the peak. Wholesale inflation in India moderated significantly in July amid easing commodity prices, Nageswaran further said. 

"The Q2 FY2023 GDP growth of 6.3% came in similar to our estimate of 6.5%, even as the GVA rise of 5.6% trailed our forecast (6.3%) by a wide margin, led by an unexpected contraction in manufacturing that seems to reflect the impact of high input prices on margins in certain sectors.

"We are retaining our estimate of the real GDP growth for FY2023 at 7.2%, although a deepening of the external slowdown poses a risk," said Aditi Nayar, chief economist, ICRA, Gurugram. 

"As expected, service activity was the major driver of growth, while the manufacturing GDP contracted. On the demand side, private consumption share to GDP fell — a signal towards the fragility of the consumption recovery seen in Q1 as the pent-up demand effect faded and elevated inflation hurt consumer spending.

"Going forward, both export growth and consumption could present downside risks to the GDP outlook. We expect H2 FY23 growth to be between 4% and 4.5% and full-year growth at 6.8%. For FY24, growth is expected to moderate further to 6% as global headwinds rise," said Sakshi Gupta, principal economist, HDFC Bank, Gurugram.

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Published on: Nov 30, 2022, 5:32 PM IST
Posted by: Jamma Jagannath, Nov 30, 2022, 5:30 PM IST