India GDP growth slows down to 4.4% in Q3; FY23 estimate retained at 7%

Indian economy grew at 4.4 per cent between October and December 2022 (Q3FY23), data released by the Ministry of Statistics and Programme Implementation (MoSPI) on Tuesday showed. However, in the current financial year, India's gross domestic product (GDP) is expected to grow at 7 per cent. 

However, the estimates for FY22 have been revised upwards to 9.1 per cent. The growth in nominal GDP at current price during FY23 is estimated at 15.9 per cent as compared to 18.4 per cent in FY22.

In the first Advance Estimates released in January too, MoSPI had estimated GDP growth in FY23 at 7 per cent, marginally higher than projections by the Reserve Bank of India (RBI) and World Bank at 6.8 per cent and 6.9 per cent, respectively.

According to earlier estimates, in Q3FY22, the economy grew at 5.4 per cent. However in the quarter ending September (Q2FY23), the GDP growth was recorded 6.3 per cent. 

In a survey based on 41 professional forecasters, the RBI earlier this month pegged the GDP growth forecast for the third quarter at 4.6 per cent with a range of 4 to 6.9 per cent. 

However, RBI had itself projected the real GDP growth for FY23 at 6.8 per cent, with the third quarter and fourth quarter growth at 4.4 per cent and 4.2 per cent, respectively.

Jyoti Prakash Gadia, Managing Director, Resurgent India, said, "On expected lines ,the substantially lower rate of growth of 4.4 per cent has been announced for Q3 today.The overall trend of  subdued  demand has lead to major reduction in the growth of manufacturing sector which had earlier played an important role in GDP growth.Although Agriculture sector has done reasonably well,it was not sufficient to prop up the aggregate growth rate."

In our view, the base effect is also a significant reason for the lower growth rate as the economy had shown a robust growth rate of over 11 per cent in the Corresponding period of Q3 of previous year. The revised downward projection of 7 per cent GDP growth for the full year 2022-23 is also indicative of the tough and challenging times in   the next quarter too, due to global uncertainties and  recessionary trends in the  current rising interest rate  cycle", Gadia further added.