India’s Q1FY23 GDP grows 13.5%, fastest in a year: Govt data

India’s economy achieved its fastest annual expansion in a year in the April-June quarter, according to data released by the National Statistical Office (NSO) on Wednesday.

India’s gross domestic product (GDP) in the three months to June 30, 2022 was 13.5%. However, this is lower than the Reserve Bank of India’s projection of 16.2% GDP growth in Q1FY23.

June quarter growth was driven by manufacturing and services, such as accommodation and travel, rebounding from pandemic restrictions.

The last time India’s GDP achieved higher annual growth was in April-June 2021, when it was 20.1% higher than the pandemic-depressed level of a year before.

After recording a 20.1% growth in the first quarter of 2021-22, GDP growth had consistently fell during the entire FY22. In the second quarter of 2021-22, it slid to 8.4%, in the third quarter, it further fell to 5.4% while in the fourth quarter of the previous fiscal, it came down to 4.1%.

“Real GDP or Gross Domestic Product (GDP) at Constant (2011-12) Prices in Q1 2022-23 is estimated to attain a level of Rs 36.85 trillion, as against Rs 32.46 trillion in Q1 2021-22, showing a growth of 13.5% as compared to 20.1% in Q1 2021-22,” said Ministry of Statistics & Programme Implementation.

“Nominal GDP or GDP at Current Prices in Q1 2022-23 is estimated at Rs 64.95 trillion, as against Rs 51.27 trillion in Q1 2021-22, showing a growth of 26.7% as compared to 32.4% in Q1 2021-22,” said MoSPI in a statement.

The Reserve Bank of India (RBI) has raised its benchmark repo rate by 140 basis points since May, including 50 basis points this month, while warning about the impact of a global slowdown on domestic growth prospects.

Many economists expect another rate hike of about 50 basis points next month, followed by one more of 25 basis points thereafter.

Consumer spending, which accounts for nearly 55% of economic activity, has been hit hard following a rise in prices of food and fuel, though monthly inflation has moderated in the past three months.

Many analysts had projected the Indian economy will expand at a double-digit growth rate due to the base effect.

According to rating agency Icra, the gross domestic product was likely to grow at 13% while State Bank of India, in its report, projected the growth rate at 15.7% for April-June 2022.

However, economists expect the pace of India’s economic growth to sharply slow in the next few quarters as higher interest rates hit economic activity.

China registered an economic growth of 0.4% in April-June 2022. The RBI has projected the economy’s growth at 7.2% for the current financial year.

India’s $3.3 trillion economy, with a per capita income of around $2,100, has grown less than 2% a year in real terms on average over the past three years after contracted 6.6% in 2019/20 during the 2019/2020, which largely coincided with the coronavirus pandemic.

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