“GDP at Constant (2011-12) Prices in Q3 2022-23 is estimated at ₹40.19 lakh crore, as against ₹38.51 lakh crore in Q3 2021-22, showing a growth of 4.4 percent. GDP at Current Prices in Q3 2022-23 is estimated at ₹69.38 lakh crore, as against ₹62.39 lakh crore in Q3 2021-22, showing a growth of 11.2 percent,” a government press release stated.
According to the data, the Indian economy is expected to grow at 7 per cent in FY23. It also stated that the economic growth for 2021-22 has been revised upwards to 9.1 per cent from 8.7 per cent earlier.
The GDP had moderated to 6.3 per cent in the last quarter from 13.5 per cent in the first quarter of FY23 largely due to pandemic-related statistical distortions.
The manufacturing sector contracted by 1.1 per cent over the previous quarter when it had contracted 3.6 per cent. Meanwhile, the farm sector recorded a growth of 3.7 per cent in Q3 as against 2.4 per cent in Q2.
The mining sector surged to 3.7 per cent in Q3 as compared to a contraction of 0.4 per cent in the previous quarter. Electricity and construction sectors witnessed an increase of 8.2 per cent and 8.4 per cent respectively during Q3 as against 6 per cent and 5.8 per cent respectively in Q2.
Contact-intensive sector like hotels and transport declined sharply to 9.7 per cent as against 15.6 per cent in Q2. Real estate grew at 5.8 per cent as compared to 7.1 per cent in Q2. Meanwhile, defence sector grew by 2 per cent in the October-December quarter as against 5.6 per cent in July-September quarter. Lower GDP growth can be attributed to aggressive rate hikes by the Reserve Bank of India (RBI) in order to tame the high inflation levels in the country.
In addition to these factors, the slowdown in exports and consumer demand has also contributed in bringing down the numbers. The dent in consumer demand can be linked with the bullish rate hikes by the RBI to bring down inflation in the past few months. Meanwhile, slowdown in external demand could be a consequence of the rate hikes by major central banks around the world.
Earlier, a Reuters poll of economists had predicted a slowdown in India’s economic growth for the third quarter due to a series of interest rate hikes. Even the government data had shown that India’s economy was expected to slow further to 4.4 per cent in the current quarter, and across 2023-24 would average 6.0 per cent.
Rahul Bajoria, an economist with Barclays India, said the economy would have grown at a tad lower at 5 per cent in FY23 Q3.
“For FY24, we continue to expect a soft landing as tighter monetary conditions and still-elevated inflation take a toll. We continue to see growth moderating to 6 per cent and forecast steady GDP growth of 6.5 per cent in FY25,” Bajoria had said.
Economists at the State Bank of India had projected a GDP growth of 4.6 per cent for the December quarter, citing that as many as 30 high frequency indicators were not as robust as they were in the previous quarters. However, the projection was higher than the RBI’s forecast of 4.4 per cent for the Q3 FY23.