The Indian economy grew at 8.7% in 2021-22 with 4.1% growth in the fourth quarter of the financial year, which is better than private forecasts, according to provisional data released by the National Statistical Office (NSO). A Bloomberg forecast of economists had projected only 3.8% GDP growth in the fourth quarter ended March 31, 2022.
The data show that the GDP levels in 2021-22 have crossed pre-pandemic levels on better performance by various sectors such as manufacturing and construction. The economy had witnessed a negative growth (-6.6%) in the previous financial year (2020-21) because of the Covid-19 pandemic that had a devastating impact on global economies.
The economy witnessed a 20.1% growth rate in the first quarter of 2021-22, 8.4% in the second quarter of the financial year and 5.4% in the third quarter. The growth in the fourth quarter of Fy 22 was severely hit by the Ukraine war in February 24, 2022, and embargoes against Russia by the Western nations that disrupted the global supply chain and led to soaring prices of primary commodities and crude oil.
Commenting on the GDP numbers chief economic adviser (CEA) V Anantha Nageswaran said: “Silver linings are that India is better placed than many other nations and financial sector is in far better shape to support growth in this decade.”
“NSO’s provisional estimates for FY22 indicate a real GDP growth of 8.7% and a GVA growth of 8.1%. These numbers confirm that all GDP segments have emerged higher than their pre-Covid magnitudes. This is also true for all GVA sectors except the trade, hotels, transport et. al. In fact, in 4Q FY22, all GDP and GVA segments have overtaken their corresponding 4Q FY20 levels indicating that the Indian economy is well past the Covid shock,” DK Srivastava, Chief Policy Advisor of EY India said.
Suvodeep Rakshit, senior economist at Kotak Institutional Equities said the economy is seeing a gradual recovery. “From the expenditure side, private consumption as well as investment growth were muted in 4QFY22 which reflected in the production side with contraction in manufacturing and weak growth in construction as well as services. However, much of the services, especially contact-based services, have picked up in 1QFY23. Growth in 1QFY23 will be high given a low base (1QFY22 GDP was hit by second Covid wave),” he said.
ASSOCHAM president Sumant Sinha said with 8.7% GDP expansion, India continues to remain the fastest-growing economy in the world in the fiscal 2021-22 despite a slowdown in the fourth quarter of the year due to the omicron variant of Covid-19.
“Given the focused way India handled the Omicron variant with the help of an aggressive vaccination programme and pragmatic policy interventions such as the extension of the credit guarantee scheme for MSMEs, our economy is looking at a continued and strong rebound in the 7-8% growth range in the current financial year,” he said.