Indian economy slowed further to 4.4 per cent growth rate in the October-December quarter of the current fiscal mainly due to a contraction in the manufacturing sector, showed government data on Tuesday. The number was in line with the RBI's projection earlier this month.
The GDP (Gross Domestic Product) growth was 11.2 per cent in the third quarter of 2021 and 6.3 per cent in July-September 2022, showed the data released by the National Statistical Office (NSO) on Tuesday.
The manufacturing sector's output, as per the gross value added in the third quarter of this fiscal, contracted by 1.1 per cent compared to a growth of 1.3 per cent in the year-ago period.
The GDP prices in Q3 are estimated at Rs 40.19 lakh crore, as against Rs 38.51 lakh crore in Q3 2021-22 last fiscal.
The NSO has also revised India's economic growth in 2021-22 upwards to 9.1 per cent from 8.7 per cent earlier. The government also released a second advance estimate and retained India's full-year GDP growth estimate of 7 per cent for this year.
In the previous June-September quarter, the economy had grown at 6.3 per cent, down from 13.5 per cent in the April-June quarter.
The numbers were in line with expectations as many economists had predicted moderation in the growth momentum due to weak demand amid aggressive rate hikes by the Reserve Bank of India. Since May 2022, the RBI has cumulatively increased the key lending rate to the banks by 250 basis points in order to fight inflation.
Earlier this month, RBI Governor Shaktikanta Das said that GDP is expected to grow at 6.4 per cent for 2023-24. The growth for the first quarter is pegged at 7.8 per cent, while this number could be 6.2 per cent in Q2, 6 per cent in Q3 and 5.8 per cent in Q4.
During the Monetary Policy Committee meeting announcements, the Governor said the expected higher rabi output has improved the prospects of agriculture and rural demand.
"The sustained rebound in contact-intensive sectors should support urban consumption," he said, adding that broad-based credit growth, improving capacity utilisation, government’s thrust on capital spending and infrastructure should bolster investment activity.
According to RBI surveys, Das said, manufacturing, services, and infrastructure sector firms are optimistic about the business outlook. "On the other hand, protracted geopolitical tensions, tightening global financial conditions, and slowing external demand may continue as downside risks to domestic output,” he added.
In December, the central bank lowered the country's GDP growth projection to 6.8 per cent from its earlier estimate of 7 per cent. The RBI projected the real GDP growth for 2022-23 at 6.8 per cent, with the third quarter expansion at 4.4 per cent and the fourth quarter at 4.2 per cent.
The IMF, too, has projected India's economic growth to be at 6.8 per cent while the Asian Development Bank has projected the economy to expand 7 per cent.