Q3 GDP slows to 4.4%, government hopes to hit 7% for fiscal year

NEW DELHI: India’s economic activity slowed to 4.4% in the December quarter as manufacturing activity was seen to be sluggish, although the government remained hopeful of meeting the 7% growth estimate for the current financial year.
The economy expanded at 6.3% during the second quarter of the current financial year and 5.2% in the December quarter of 2021.
The latest numbers released by the National Statistical Office also revised upwards the growth for 2021-22 to 9.1%, against 8.7% earlier, which was attributed as one of the reasons for the moderation in the third quarter of the current fiscal year.
Apart from the base effect, sectoral data based on gross value added estimated that the manufacturing sector shrank 1.1% during the third quarter, although a little better than the 3.6% contraction estimated for the July-September period.
“The major disappointment is negative growth in manufacturing, which can be attributed to weak profit and loss accounts of this sector. The second-quarter results did indicate a fall in profits due to high input costs,” said Madan Sabnavis, chief economist at Bank of Baroda.
At the same time, a good kharif harvest helped the farm sector, with housing, hospitality and financial services logging faster growth than a year ago.
A weakening of consumption demand too seemed to have had an impact, although overall capital formation held up.

To reach the 7% growth target for the current financial year, the economy will have to grow at 5.1% during the January-March quarter, which economists believe is challenging given that demand seemed to be weaker than before.
“We have seen that GDP growth for the first two quarters of the last fiscal has been revised upwards and for the third quarter it is revised downwards. Unless fourth quarter FY22 GDP is revised downwards, similar to the third quarter of FY22 growth, it will not be easy to achieve 7% growth in FY23. We still maintain our 6.9% GDP growth forecast for FY23,” said Devendra Pant, chief economist and head (public finance) at India Ratings & Research.
Both the RBI and the World Bank have projected 6.8% expansion for the current financial year.
“The trends that we have in terms of high-frequency data for 2022-23 for the fourth quarter do indicate that achieving that growth rate in the fourth quarter is well within the realm of possibility and, therefore, the 7% real GDP growth estimate for 2022-23 is very realistic,” chief economic adviser V Anantha Nageswaran told reporters, while citing high-frequency indicators such as auto sales, housing launches and air traffic to argue his case. He also said that it was tough to read too much into quarterly numbers as they were not seasonally adjusted.
Watch India’s Q3 GDP slows to 4.4%, economy to grow at 7% in FY23