India’s economy achieved its fastest annual expansion in a year in the April-June quarter, according to the NSO data published on Wednesday. The sharp up-tick in growth was driven by a favourable base effect and the ongoing economic revival.
The Gross Domestic Product (GDP) in the three months to June 30, 2022 was recorded at 13.5 per cent. However, this is lower than the Reserve Bank of India’s (RBI’s) projection of 16.2 per cent GDP growth in Q1FY23.
India’s GDP growth in Q1FY22 was 20.1 per cent. January-March GDP was up 4.1 per cent on a year before.
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“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 lakh crore, as against Rs 32.46 lakh crore in Q1 2021-22, showing a growth of 13.5 per cent as compared to 20.1 per cent in Q1 2021-22,” said Ministry of Statistics & Programme Implementation.
The last time India’s GDP achieved higher annual growth was in April-June 2021, when it touched 20.1 per cent higher than the pandemic-depressed level of a year before. 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.
The 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 per cent 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.
The next release of quarterly GDP estimates for the quarter July-September, 2022 (Q2 2022-23) will be on 30.11.2022.
Meanwhile, the output of eight core infrastructure sectors, which was also published on Wednesday by the government, slowed down to 4.5 per cent in July, the lowest in six months, against 9.9 per cent in the year-ago period. In June, the core sector output was 12.7 per cent.
The output of these infrastructure sectors expanded by 13.2 per cent in June, 19.3 per cent in May, 9.5 per cent in April, 4.8 per cent in March, 5.9 per cent in February, and 4 per cent in January.