India's GDP grew at 13.5% in Q1
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New Delhi, Sept 1: India's Gross Domestic Product (GDP) grew at 13.5% in the first quarter of 2022-23, the fastest pace in four quarters, with the Gross Value Added (GVA) in the economy rising by 12.7%, as per National Statistical Office estimates released on August 31.
The economy’s latest growth print, aided by a pick-up in private consumption spending and capital investments, is significantly lower than the 16.2% GDP uptick projected by the Reserve Bank of India’s Monetary Policy Committee and was just 3.8% above pre-pandemic levels.
The corresponding April to June quarter of last year had recorded a GDP growth of 20.1% and an 18.1% uptick in GVA amid the second COVID-19 wave, thanks to the base effects from the more stringent initial COVID-19 lockdowns. Economists expect the headline growth rate to moderate in the ongoing quarter as base effects fade out and uncertainties around global growth and domestic inflation linger on. GVA from agriculture, forestry, and fishing, the only sector that continued to grow through the pandemic, rose 4.5% from April to June, while manufacturing and mining grew by 4.8% and 6.5%, respectively. While the share of Government Final Consumption Expenditure in GDP moderated to 11.2% between April and June, from 12.6% last year, GDP growth was boosted by private final consumption expenditure which surged to 59.9% of GDP from 54% in Q1 of 2021-22 and Gross Fixed Capital Formation (GFCF) which reflects capital investments in the economy. The share of GFCF improved to 34.7% of GDP in Q1 this year from 32. 8% in 2021-22. The Finance Ministry said that GFCF and private consumption spending in the first quarter were at their highest levels in the past 10 years, aided by several reforms and steps taken by the government to reinvigorate capital investments and boost consumption. With the sharp rise in imports over the first quarter, their share of GDP has jumped to 31% from 25.7% a year ago, while the share of exports increased to 22.9% from 22.7% in Q1 of 2021-22. The Finance Ministry noted that this was the highest export share in Q1 of any year since 2014-15 “despite supply chain disruptions and slowing global demand”.
“With relatively high growth and low inflation, India, among the major peer economies has faced less of a trade-off between growth and inflation… The robust performance of high-frequency indicators in July and August 2022 indicates sustained growth in Q2 of 2022-23,” the Department of Economic Affairs in the Ministry said.