Economists: All sectors above pre-Covid level
: India’s gross domestic product (GDP) growth slowed in the July-September quarter due to a string of factors, including high inflation and rising interest rates, impact of the geopolitical situation and contraction in manufacturing and mining sectors, but policymakers said growth was expected to be in the 6.8%-7% range for 2022-23.
Data released by the National Statistical Office (NSO) on Wednesday showed that the economy expanded at a slower pace than the 13.5% estimated during the April-June period as well as the 8.4% reading during July-September 2021-22. The latest reading was, however, in line with the Reserve Bank of India’s (RBI) estimate of 6.3% for the second quarter.
A resilient farm sector, which grew by 4.6% despite unseasonal rains, and robust growth in the services and construction sectors aided the expansion during the second quarter of this fiscal year. The services sector benefited from the lifting of Covid curbs.
Economists said that a positive trend was the rebound in growth on a sequential (quarter-on-quarter) basis. The trade hotels, transport, communication and services related to broadcasting posted robust growth during the three-month period at 14.7%. All the sectors were above their pre-pandemic level, economists said.
“The economy is on track to reach a 6.8-7% growth in the current fiscal. If you look at the festival sales, bank credit growth, purchasing managers indices, the economy has maintained momentum especially in the wake of the global headwinds,” chief economic adviser (CEA) V Anantha Nageswaran told reporters, adding that domestic demand will drive growth and the external environment was uncertain and exports were not doing as well as last year.
Several agencies, economists, investment banks and retaining agencies have slashed India’s GDP growth rate for 2022-23 due to the impact of the war in Ukraine, disruption in supply chains, high inflation and tightening of interest rates.
The crucial manufacturing sector was a key concern, contracting 4.3%, while the mining segment declined by 2.8% during the September quarter. “The economy expanded on a sequential basis, showing signs of returning to normal, in terms of sector growth rates and their share of GDP. We see signs of strength in services, but expect manufacturing and exports to slow in coming months,” Rahul Bajoria, MD, Barclays, said in a note.