- Date : 18/01/2023
- Read: 4 mins
Stay updated with India's economic outlook as the government releases its first advanced estimates of 7% GDP growth for FY 2022-23 as compared to the previous year's growth of 8.7%.
India's financial year 2022-23 is off to a strong start with the government releasing the 1st forecasts for the country's Gross Domestic Product (GDP) on Friday evening, with a projected growth of 7%. This comes ahead of the upcoming General Budget presentation in the Lok Sabha on February 1, 2023, and is a positive sign considering the country had seen an 8.7% growth in the financial year ending March 31, 2022. Advance estimates released by the National Statistical Office (NSO) for the current year, provide much-needed insight into India's economic landscape. This article dives deep into the figures to help policymakers, investors and businesses understand the present economic scenario in the country.
Highlights of the data released by NSO are presented below:
- India's nominal GDP growth for the financial year 2023 is estimated to be 15.4%, which is lower than the 19.5% recorded in FY22.
- The GVA at basic prices is estimated to increase by 6.7% during this financial year, which is lower than the 8.1% seen in 2021-22.
- The real GDP for 2022-23 is ₹157.60 lakh crore, an increase from the tentative figures of GDP for 2021-22 of ₹147.36 lakh crore, which was released on May 31, 2022. The growth in real GDP for 2022-23 is expected to be 7.0%, a decrease from the 8.7% growth seen in 2021-22.
- The manufacturing sector's output is expected to slow down to 1.6% in comparison to the growth of 9.9% seen in FY22 while the construction sector's growth rate may decrease to 9% in FY23 from the 11.5% growth seen in FY22.
- The growth rate of the mining sector is predicted to be 2.4% in the current fiscal year, a significant decrease from the 11.5% growth seen in 2021-22.
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India's economy shines in comparison to others
According to IMF deputy managing director Antoinette Sayeh, India is a relatively bright spot in the world economy today, with growth rates significantly higher than the peer average.
Macroeconomic policies are being implemented to counter the significant challenges. Fiscal policy measures are being utilized to assist vulnerable groups and monetary policy is being used to tackle the ongoing high inflation.
The Reserve Bank of India (RBI) revised its forecast for the country's GDP growth rate to 6.8% for the current fiscal year, down from its previous projection of 7%. The revision was due to the ongoing geopolitical tensions and tight global financial conditions. The RBI also stated that the real GDP growth for 2022-23 is expected to be 6.8% with a 4.4% growth in the third quarter and 4.2% in the fourth quarter.
- The second quarter’s GDP growth decreased to 6.3% from 13.5% in the preceding quarter.
- In April of last year, the RBI reduced their estimated GDP growth from 7.8% to 7.2%, and decreased it to 7% in September.
- The IMF has adjusted India's growth projection for FY23 from 7.4%, which was announced in July 2022, to 6.8%.
- The World Bank has revised its initial forecast of a 6.5% GDP increase for the country's current fiscal year to 6.9%.
- The central bank, which has already raised its benchmark rate by 225 basis points this fiscal year, plans to continue tightening. Experts predict that the RBI will increase the rate by another quarter-point during its next policy review on February 8th, due to persistent core inflation.
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Overall, the forecasts for India's GDP growth in FY23 indicate a positive outlook for the country's economy, with a projected growth rate of 7%, significantly higher than the peer average. Experts believe that RBI will increase the rate by another quarter point in the next policy review (8th February 2023).
Investor and consumer confidence is high in India due to the country's strong economic performance and controlled inflation rate as compared to other global economies. Interest rates are currently high with little room for an upward revision. The price of crude oil is likely to be stable or decrease in the near term.
