Surpassing most expectations, the Indian economy grew at 6.1 per cent in the fourth quarter of the last financial year, up from 4.5 per cent in the third quarter, as per the latest estimates of the National Statistical Office released on Wednesday. Buoyed by this momentum, growth for the entire financial year (2022-23) has now been pegged at 7.2 per cent, marginally higher than the earlier estimate of 7 per cent. In nominal terms, though, the economy grew at a slower pace in the fourth quarter. The full year estimates are in line with RBI Governor Shaktikanta Das’s expectations. Das had earlier said the economic indicators had pointed towards sustained momentum in the fourth quarter and that it would not be a surprise if GDP growth came in higher than 7 per cent.
The disaggregated data points towards a healthy growth momentum across most sectors. The agricultural sector grew at a robust 5.5 per cent in the fourth quarter, with growth for the full year estimated at 4 per cent. Within the non-farm sector, manufacturing, which had contracted in both the second and third quarter, turned around in the fourth quarter. Analysts have attributed this pick up to an improvement in both volumes and margins. Alongside, construction, another labour intensive sector, has also registered a healthy performance, with growth for the full year being estimated at 10 per cent. Within services, the trade, hotels, transport and communications sector has maintained its growth momentum, while the financial, real estate and professional services sector has seen a sustained pickup over the year.
However, the continuing weakness in private consumption is difficult to reconcile. Private consumption grew by only 2.8 per cent in the fourth quarter, marginally higher than 2.2 per cent in the third quarter, reflecting in part the subdued performance of the consumer durables segment in the index of industrial production. Government consumption has also remained weak, though, on the other hand, investment activity continued to be healthy (mirroring the performance of the capital goods and infrastructure segments in the index of industrial production), while net exports were less of a drag. Over the course of the coming year, the growth momentum is likely to come under pressure as the full impact of tighter global and domestic financial conditions is felt. There are also concerns over the monsoon and its impact on rural demand. In its last monetary policy committee meeting, the RBI had forecasted the Indian economy to grow at 6.5 per cent in 2023-24. Others are, however, more pessimistic.
