India's GDP growth comes in at 6.3% in Q2: manufacturing, mining witness negative growth
- India's economy grew by 6.3% in Q2 of FY23 as compared to 8.4% growth it had seen in Q2 FY22.
- Analysts predicted that the Indian economy would expand at half of the growth rate of 13.5% recorded in the April-June quarter this fiscal.
- China registered an economic growth rate of 3.9% in July-September, 2022.
AdvertisementIndia's economy grew by 6.3% in the second quarter of the current fiscal, official data released on Wednesday showed.
The gross domestic product (GDP) had expanded by 8.4% in the July-September quarter of 2021-22, according to data released by the National Statistical Office (NSO).
Analysts had projected the Indian economy would expand at half of the growth rate of 13.5% recorded in the April-June quarter this fiscal.
According to rating agency ICRA, the GDP was likely to grow at 6.5% while State Bank of India projected the growth rate at 5.8% in the September 2022 quarter.
Earlier this month, in an article published in the Reserve Bank of India (RBI) bulletin, the GDP growth was pegged at 6.1-6.3% in the second quarter of this fiscal year. China registered an economic growth rate of 3.9% in July-September, 2022.
‘Manufacturing disappointed with negative growth rate’
Bank of Baroda report said that the Q2 GDP numbers were slightly lower than their forecast of 6.5%.
“While most numbers were on expected lines, manufacturing has been a disappointment with a negative growth rate. In case of manufacturing it has been clearly affected by low growth for the small and medium enterprises (SME) sector as per index of industrial production (IIP) numbers, and fall in profits that has affected value added for the organized sector,” said Madan Sabnavis, chief economist of Bank Of Baroda.
He added that the agriculture growth of 4.6% should be viewed with caution as it is early days of Kharif harvest, and the allied sectors are more likely to have pushed up this growth rate.
“We do expect GDP growth to be around 6.8% for the year, with a downward bias depending on the changing economic environment. But the downside will not be more than 0.2-0.3%,” said Sabavis.
Mining and manufacturing sectors have both witnessed negative growth rates. While the mining sector growth might have been affected by a high base effect, combined with fall in output of oil and gas.
FY23 GDP downgrades continue
In the first quarter of FY23 as lockdowns ended, GDP expanded by 13.5%. However, this was also lower than most estimates – sending many agencies and the RBI itself to revise their growth projections of the year to 7% this September, from 7.2% earlier.
On Monday, rating agency Standard & Poor’s said that it now expects India’s GDP to grow at 7% for FY23 as compared to the 7.3% it had estimated earlier. CRISIL estimates mirror S&P’s – as it lowered from 7.3% to 7% – but over a week ahead of S&P. CRISIL also expects FY24 growth to slow down further to 6%.
Goldman Sachs, like CRISIL, believes that India’s growth momentum will be affected by the fading effects of post-Covid reopening, coupled with higher borrowing costs. A couple of weeks back, it slashed GDP growth expectations to 5.9% next year, as compared to the 6.9% growth of 2022.
All in all, most agencies believe that it has become tougher to predict the pace of growth since the pandemic. “We however believe there is somehow a large disconnect between leading indicators and GDP growth since the onset of the pandemic. Growth impulses continue to be strong and it may be better to look through the GDP headline numbers for a couple of quarters before arriving at a definitive conclusion about the growth trajectory,” said SBI Ecowrap in a report released on November 28.
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