New Delhi: The economy grew 7.2 percent in the financial year 2022-23, faster than the 7 percent predicted in February, buoyed by a strong performance in the January-March 2023 quarter by almost all sectors of the economy, government data shows.
The Ministry of Statistics and Programme Implementation Wednesday released data on the growth of India’s gross domestic product (GDP) for the fourth quarter of 2022-23 as well as for the full year. In February, the ministry had released its second advance estimates for national income, which had predicted that GDP growth in the year would be 7 percent.
The 7.2 percent growth for the full year 2022-23, while faster than earlier estimated, is significantly slower than the 9.1 percent growth seen in 2021-22.
The better-than-predicted growth in 2022-23 can largely be attributed to the relatively-strong performance of the economy in the fourth quarter. GDP growth in the January-March 2023 quarter came in at 6.1 percent, faster than the 4.5 percent seen in the previous quarter.
Looked at sectorally, agriculture grew 4 percent in 2022-23, faster than the 3.5 percent growth it registered in the previous year. The sector has been seeing accelerating growth throughout 2022-23. In the fourth quarter, the sector grew 5.5 percent, compared with 4.7 percent in Q3, 2.5 percent in Q2, and 2.4 percent in Q1.
The agriculture sector’s Q4 growth was also faster than the 4.1 percent seen in the fourth quarter of the previous year.
The manufacturing sector saw a mixed performance in 2022-23. While the sector’s full-year growth came in at a relatively-slow 1.3 percent, compared with 11.1 percent in the previous year, the quarterly data shows that the sector has rebounded somewhat over the course of the year.
The manufacturing sector grew 4.5 percent in the fourth quarter, breaking a trend of contraction in Q3 (-1.4 percent) and Q2 (-3.8 percent). The sector grew 6.1 percent in the first quarter of the financial year.
The 4.5 percent growth in Q4 could, however, be due to a low-base effect, since the sector managed a growth of only 0.6 percent in the fourth quarter of the previous year.
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‘No complacency’
The construction sector, a huge employer in India, continued to see robust growth in 2022-23, of 10 percent, although this was slower than the 14.8 percent growth seen in the previous year.
The construction sector, too, has been seeing accelerating growth for most of the year. The sector grew 10.4 percent in Q4, compared with 8.3 percent in Q3, and 5.7 percent in Q2. It saw its best performance in the financial year in the first quarter, however, growing at a rapid 16 percent.
The fourth-quarter performance of the construction sector was significantly better than the 4.9 percent growth registered in the fourth quarter of the previous year.
The services sectors, too, have been seeing robust growth. The ‘trade, hotels, transport, and communications’ grouping of sectors grew 14 percent in 2022-23, faster than the 13.8 percent growth in the previous year.
This grouping, however, has seen growth slowing over the course of the financial year.
In the fourth quarter, it grew 9.1 percent, compared with 9.6 percent in Q3, 15.6 percent in Q2, and 25.7 percent in the first quarter. The fourth quarter growth is nevertheless significantly better than the 5 percent the sector saw in the same quarter of the previous year.
The ‘financial, real estate, and professional services’ sector grew at 7.1 percent in 2022-23, compared with a 4.7 percent growth in 2021-22. In the fourth quarter, the sector grew 7.1 percent as well, up from 5.7 percent in the previous quarter, and 4.6 percent in the fourth quarter of the previous year.
Looking ahead, economists feel that the positive growth numbers should not lead to complacency.
“A higher growth number than expected at 7.2 percent will put pressure on growth performance in FY24, which we project at 6-6.5 percent,” Madan Sabnavis, chief economist at the Bank of Baroda, said in a note following the data release.
“The phenomenon of pent-up demand will not be strong and private sector investment has to pick up this year,” he added. “Hence, the two engines that need to fire would face that much more pressure given that exports will not be contributing to growth this year.”
With global growth slowing down, Sabnavis said, it would be challenging to maintain 2023-24 growth at more than 6 percent, adding that attention must be paid to the monsoon and its impact on rural demand.
Aditi Nayar, chief economist and head – research and outreach, ICRA Ltd, said, “Benefitting from the positive surprise for Q4, the FY2023 GDP growth of 7.2 percent exceeded the advance estimate of 7.0 percent by a healthy margin.”
“With the expansion relative to the respective pre-Covid levels of FY2019 improving to a robust 17.3 percent in Q4 FY2023 from 15.3 percent in Q3 FY2023, the underlying momentum of the Indian economy remains healthy,” she added.
Report updated with additional information
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