BENGALURU (Reuters) – India’s economic growth slipped to 4.1% year-on-year in January -March, data showed on Tuesday, dragged down by soaring prices that could make the central bank’s task of taming inflation without hitting growth more difficult.
Gross domestic product grew 4.1% year-on-year in January-March quarter, the data showed, in line with 4% forecast by economists in a Reuters poll, and below 5.4% growth in Oct-December and growth of 8.4% in July-Sept.
COMMENTARY
RADHIKA RAO, SENIOR ECONOMIST, DBS BANK, SINGAPORE
“Fourth quarter of FY22 GDP growth eased to 4.1% y/y, with the sequential pace restrained by temporary mobility restrictions imposed back then, impact of inclement weather and, separately, high commodity prices on account of geopolitical risks, besides a high base.”
“We don’t expect this outcome to materially disrupt the central bank’s policy normalisation plans. This subdued reading is likely to be followed by a strong double-digit growth in June’22 quarter on base effects.”
KUNAL KUNDU, INDIA ECONOMIST, SOCIETE GENERALE, BENGALURU
“While government expenditure expectedly provided support, domestic consumption remained quite muted with elevated inflation and the third wave of the pandemic taking its toll on discretionary demand.”
“Worryingly, per capita real GDP recorded a contraction of 0.5% from its FY19 level. On the value-added front, manufacturing contracted as expected. Yet a stronger inventory buildup suggests weaker demand.”
“Although the print is slightly higher than expectation, it is mainly so on account of sharply lowered expectation leading to the data release. The visibly weaker activity momentum heading into FY23, elevated inflation, negative rural real wage – all point to a weaker growth print during the current year.”
“We stick to our FY23 real GDP growth forecast of 7.0% y/y with a potential for further downward revision. We also expect the RBI to announce further downward revision of its growth forecast for FY23 during its next meeting in June.”
UPASNA BHARDWAJ, SENIOR ECONOMIST, KOTAK MAHINDRA BANK, MUMBAI
“While the readings have broadly come in line with expectations, the outlook remains clouded with uncertainties especially with escalating crude oil prices. Further, weak labor markets, limited ability on additional fiscal spends, reduced corporate margins due to rising input prices and weaker global demand remain a concern.”
SAKSHI GUPTA, PRINCIPAL ECONOMIST, HDFC BANK, GURUGRAM
“GDP growth for Q4 FY22 at 4.1% reflects the impact of the Omicron wave, higher input costs and a high base in certain sectors from last year. Manufacturing activity contracted while agriculture was the biggest support. The worrying part remains private consumption, which saw a decline in share in GDP in the fourth quarter.”
“With rising inflationary pressures, consumption recovery remains under a cloud of uncertainty for FY23. We expect growth to print at 7.2% in the current fiscal. This GDP print does little to change our view that the RBI is likely to raise rates by 25bps at the upcoming policy.”
SUVODEEP RAKSHIT, SENIOR ECONOMIST, KOTAK INSTITUTIONAL EQUITIES, MUMBAI
“Growth in 1QFY23 will be high given a low base (1QFY22 GDP was hit by second COVID wave). Underlying growth trends remain mixed and recovery is yet to be fully broad-based. Nominal GDP growth at around 15% in 4QFY22 benefited from high inflation.”
“We expect FY2023 GDP growth to be around 7.3%, with much of the growth being propped up by 1QFY23 print. While taming inflationary pressures will be the primary target, it is unlikely that policy makers will take their eyes off the growth trajectory, especially as recovery is gradual and uneven.”
RUPA REGE NITSURE, GROUP CHIEF ECONOMIST, L&T FINANCIAL HOLDINGS, MUMBAI
“Fourth-quarter GDP growth numbers do reflect the adverse impact of Omicron-related restrictions, high inflation and the disruption created by Ukraine-Russia war and China’s zero COVID policy.”
“Good momentum in agricultural growth in Q4 is a positive fact and with expected normal monsoon for FY23, we hope the momentum for agriculture growth will be maintained during FY23.”
GARIMA KAPOOR, ECONOMIST – INSTITUTIONAL EQUITIES, ELARA CAPITAL, MUMBAI
“Going forward, while the continued normalization of contact-based service sector, revival in private capex on the back of PLI schemes and ‘China plus 1’ strategy, government’s continued focus on capex and improved rural consumption owing to higher realizations in cultivation income will act as tailwinds, slowdown in global growth, elevated energy prices, rising interest rate cycle and tightening of financial conditions will be key headwinds.”
“Amid expectation of elevated energy prices through FY23E, we pare down our FY23E GDP growth expectation at 7.5% revised down from 7.8%.”
(Reporting by Rama Venkat, Chandini Monnappa, Nallur Sethuraman and Chris Thomas in Bengaluru; Editing by Devika Syamnath)
