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India’s GDP growth slows to 4.4% in October-December quarter

India’s gross domestic product (GDP) growth rate fell for the second straight quarter in the October-December period, coming in at 4.4 percent, the Ministry of Statistics and Programme Implementation said.

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The 3rd Quarter(Q3) GDP Growth:

At 4.4 percent, the latest quarterly growth number is lower than the 6.3 percent growth that was recorded in the second quarter of 2022-23, which itself was less than half the 13.2 percent increase posted in April-June 2022 as the GDP growth rate benefitted from a low base in the early part of the year.

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RBI’s forecasts of The Fiscal Year 2023-24 GDP Growth:

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In December, the Reserve Bank of India (RBI) had forecast a growth rate of 4.4 percent for the last quarter of 2022. However, at the time, the central bank had projected this year’s growth rate at 6.8 percent.

But as per the statistics ministry’s first advance estimate of GDP, released in early January, India’s GDP was set to grow by 7 percent in 2022-23. The second advance estimate released by the government on February 28 has retained India’s full-year GDP growth estimate of 7 percent for this year.

Manufacturing: A cause of concern:

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India’s Gross Domestic Product (GDP) growth slowed to a three-quarter low of 4.4 per cent in October-December 2022-23 primarily due to a 1.1 per cent contraction in manufacturing, along with weaker private consumption demand and government expenditure, according to data released by the National Statistical Office (NSO).

Chief Economic Adviser V Anantha Nageswaran said manufacturing, on the face of it, has slowed down but there are enough high-frequency indicators showing fairly robust manufacturing activity. “Manufacturing appears to have slowed down on the face of it due to rising input cost, but if you look at PMI (Purchasing Managers’ Index) indicators, the manufacturing sector is in good health and performance of core sector in January tells us we do have a fairly robust manufacturing growth rate in the fourth quarter,” he said.

7 percent GDP growth in this Fiscal Year(2023-24):

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“India is poised to achieve 7 percent GDP growth in 2022-23 despite global slowdown,” Chief Economic Advisor (CEA) V Anantha Nageswaran said in a press briefing, after the GDP numbers were released.

“The growth momentum carried on in October-December and it was the base effect which resulted in a GDP growth rate of 4.4 percent,” the CEA added. The gross value added (GVA) growth for the third quarter came in at 4.6 percent during the third quarter, as against 5.5 percent in the July-September period.

The consumption growth for the the October-December period came in 2.1 percent, which is lower than 8.8 percent in the July-September. The capital formation growth also slipped to 8.3 percent in the third quarter, as against 9.7 percent in the second quarter of the current fiscal.

The Real & Nominal GDP Growth for This Fiscal Year(2023-24):

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The country’s real GDP growth for FY23 is pegged at 7 percent, as the per the second advance estimate. This estimate is the same as shared in the first advance estimate.

The nominal GDP growth is pegged at 15.9 percent in the second advance estimate, which is up from 15.4 percent in the first advance estimate. The government has also revised down the GDP growth for the April-June quarter quarter, from 13.5 percent to 13.2 percent.

(image credit: respective producers)

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