Economic growth reduces to 5.4% from the expected 8.9%: NSO

According to the National Statistical Office (NSO), the Indian economy grew at 5.4% in the third quarter (Q3) of FY22. The statistics office reduced the overall expected growth for FY22 to 8.9% from 9.2%. According to the experts, the third wave of the pandemic on contact-intensive services sectors in the fourth quarter (Q4) and the spike in commodity prices due to the Russia-Ukraine war may have reduced the Gross Domestic Product (GDP) growth in FY22. The statistics office data show services sector grew at a robust 8.2%, while the manufacturing sector remained almost static, hit by the shortage of semiconductors. The labour-intensive construction sector contracted 2.8%. Chief economic adviser at Brickwork Ratings, Govinda Rao, said to achieve 8.9% growth, Q4 GDP had to grow 4.8%. Retail oil price revisions might resume early March after the Assembly elections are over. The Reserve Bank of India (RBI) had estimated a 10% price hike of the Indian crude basket could increase the consumer price index by 20 basis points. The private consumption remained robust in Q3, showing an investment revival in the second quarter (Q2) petered out while weak government expenditure declined growth. However, government expenditure may significantly pick up in the March quarter. The Controller General of Accounts data showed revenue spending increased by 30%, even as capital spending was 6% lower than in January last year. The second advance estimates the share of private consumption expenditure in FY22 to be 1.2% bigger than in FY20. As a result, the size of all demand-side drivers of GDP in FY22 is comparatively bigger than FY20. According to data, eight infrastructure sectors witnessed growth, at the rate of 3.7% in January against 4.1% in December. Image Source