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In Short: India's GDP grew by 6.1% in the last quarter of the previous fiscal year, surpassing analyst estimates. The overall growth rate for FY23 is now projected to be 7.2%, according to MOSPI data. The manufacturing sector recorded a growth of 4.5% in Q4, while agriculture saw a growth rate of 5.5%. The strong performance of sectors like trade, hotels, transport, and services contributed to the overall growth. RBI Governor Shaktikanta Das expressed optimism, stating that growth for FY23 could exceed 7%. India's economy has remained resilient despite global challenges posed by the pandemic. S&P Global predicts a real GDP growth of around 6% for India in 2023.
NEW DELHI: India's gross domestic product (GDP) for the last quarter of the previous fiscal year surpassed analyst estimates, registering a remarkable growth rate of 6.1%. The Ministry of Statistics and Programme Implementation (MOSPI) data released on Wednesday revealed that the overall growth rate for FY23 is now projected to reach 7.2%.
The Reserve Bank of India (RBI) had estimated a Q4FY23 real GDP growth rate of 5.1%, while SBI Research had predicted a growth rate of 5.5%. However, the robust performance of the Indian economy exceeded expectations, driven by steady urban demand and government spending, leading to a higher growth rate.
In FY23, the Indian economy demonstrated resilience and exhibited significant growth rates of 13.1%, 6.2%, and 4.5% in Q1, Q2, and Q3, respectively, on an annual basis. Notably, the manufacturing sector witnessed a remarkable upturn, with a 4.5% growth compared to a 1.1% contraction in the previous quarter. The agriculture sector also displayed positive growth, expanding by 5.5% compared to a 3.7% growth in the same period.
According to provisional estimates of Gross Value Added (GVA), the manufacturing sector recorded a growth of 1.3% in FY23, following an impressive 11.1% growth in FY22. Similarly, the agriculture, forestry, and fishing sectors witnessed a growth rate of 4% in FY23, surpassing the 3.5% growth recorded in the previous fiscal year.
The strong performance of sectors like trade, hotels, transport, communication, and services related to broadcasting further contributed to the overall growth, with a growth rate of 14% in FY23 compared to 13.8% in FY22. Additionally, high-frequency indicators indicated an increase in urban incomes, boosting sales of luxury cars, Apple mobile phones, and air travel. The decline in food, crude oil, and raw material prices further bolstered demand for services and manufactured items.
Economists and analysts have lauded India's growth performance, emphasizing its resilience amid global headwinds and a challenging geopolitical backdrop. Radhika Rao, economist at DBS Bank, stated, "A strong GDP beat will provide the central bank headroom to extend its pause in June." However, experts also cautioned about potential risks from the global slowdown and volatility in financial markets, which could impact exports and the growth outlook in the coming quarters.
RBI Governor Shaktikanta Das expressed optimism about India's growth, stating that the central bank expected the growth rate for FY23 to surpass 7%. Das highlighted the sustained momentum observed in various high-frequency indicators during the fourth quarter, indicating a strong economic revival.
India's economy has emerged as an outlier, maintaining one of the highest growth rates among major nations despite the challenges posed by the Covid-19 pandemic. Ratings agency S&P Global recently projected real GDP growth of approximately 6% for India in 2023, outperforming its emerging market peers amidst a global slowdown. With solid investment and consumer momentum, India is poised for a positive growth trajectory over the next 3-4 years.