Indian Economy Growth Estimates At 8.7 Per Cent In FY22, Q4 Growth At 4.1 Per Cent

Against a contraction of 6.6 per cent in the previous financial year, hindered by the pandemic, the economy is estimated to grow at 8.7 per cent in the financial year of 2022. Growth in the fourth quarter of FY22 was at 4.1 per cent against 5.4 per cent in Q3, 8.4 per cent in Q2, and 20.1 per cent in Q1. The fourth-quarter growth figures have been impacted by the omicron variant and the rising fuel prices driven by the crisis in Ukraine and the consequent inflation denting consumer spending.

Nominal GDP growth was 19.5 per cent in FY22, whereas the Gross Value Added (GVA) stood at 8.1 per cent against 4.8 per cent in FY21. For industries related to trade, hotels, and transport, against a contraction of around 20 per cent in the previous financial year, 11.1 per cent growth was witnessed, thus shaking off the pandemic blues.

In FY22, manufacturing grew by 9.9 per cent but registered a contraction of 0.2 per cent in Q4. The construction sector also showed a growth of over 11 per cent, recovering from the negative pandemic impact in FY21.

Agriculture, which grew at 3 per cent against 3.3 per cent in FY21, has been hit by the soaring heatwave in March. It is expected that the growth in the first quarter of FY23 will also bear the brunt of the unexpected weather patterns and the supply-chain crisis due to the Covid lockdowns in China. Already, there are reports coming in from Punjab about a drop in the wheat yields by over 10 per cent.

Taking into account the prevailing retail inflation, which breached the acceptable 6 per cent mark in April 2022, the Central Bank has swung into action, hiking the repo rate. The surging commodity prices have also had an impact on India's oil imports.

Walking the talk on securing the country's energy interests, the government imported more than 24 million barrels of Russian crude this month, up from 7.2 million barrels in April and about 3 million in March, and is set to receive about 28 million barrels in June, as per a recent report. It is expected that the inflationary pressures will ease off in the coming months.

The numbers, however, are in line with the expectations of most economists, even with the deceleration since Q3. For the first quarter of the current financial year, the threat to the economic growth stems from external factors, with the 7.79 per cent retail inflation figure weighing on the minds of both policymakers and consumers.

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