India's GDP Growth Eases To 4.4% In Q3 FY2023

India's GDP or gross domestic product slowed to 4.4 per cent in the October-December quarter 2022, primarily due to a 1.1 per cent contraction in manufacturing, along with weaker private consumption demand and government expenditure, according to the second advance estimates released by the Ministry of Statistics and Programme Implementation (MoSPI) on Tuesday.

Slowing from 6.3 per cent in July-September and 13.2 per cent in April-June quarter, the third quarter reflected the impact of subdued consumption demand and exports amid rising input costs and interest rates.

For the full financial year 2022-23, the National Statistics Office (NSO) has retained the growth estimate at 7 per cent in the second advance estimates. According to the first advance estimates released last month, the GDP growth was pegged at 7 per cent for 2022-23. In financial year 2021-2022, India's economy grew at 8.7 per cent.

Private consumption expenditure slowed sharply to 2.1 per cent in October-December from 10.8 per cent in the corresponding period last year and 8.8 per cent a quarter ago despite robust high frequency data. Manufacturing continued to be in the negative territory for the second consecutive quarter at (-)1.1 per cent in October-December as against (-) 3.6 per cent in April-June and 1.3 per cent growth in the year-ago period, indicating impact of rising input costs.

With a 7 per cent growth rate estimated for the full financial year, GDP is expected to grow at 5.1 per cent in the January-March quarter. With the revisions undertaken for the previous fiscal, the GDP components for FY23 also underwent revision: government final consumption expenditure has been revised down to 1.2 per cent from 3.1 per cent earlier; private final consumption expenditure is now estimated at 7.3 per cent down from 7.7 per cent earlier; while gross fixed capital formation - an indicator of investment - is seen growing 11.2 per cent as against earlier estimate of 11.5 per cent.

As per the data released Tuesday, India's nominal GDP, which factors in the inflation rate, is set to grow by 11.2 per cent in October-December as against 14.3 per cent in the year-ago period. Gross Value Added or GVA which is GDP minus net product taxes grew at 4.6 per cent in Q3.

Among sectors, agriculture is seen growing at 3.7 per cent in October-December as against 2.4 per cent in the previous quarter and 2.3 per cent in the year-ago period, while the mining sector is seen growing 3.7 per cent in Q3 as against a 0.4 percent contraction in the previous quarter and 5.4 per cent growth in the same period last fiscal.

The services sector, which is the largest component of GDP, posted a growth of 6.2 per cent during the quarter. Construction recorded growth of 8.4 per cent in Q3 as against 0.2 per cent in the year-ago period, while trade, hotels, transport and communication grew at 9.7 per cent in Q3 as against 9.2 per cent in the year-ago period.

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