The report that India’s gross domestic product (GDP) grew at 6.1 per cent during the January-March quarter of the fiscal year 2022-23 is yet another indicator that the country’s economy is healthy and headed in the right direction. This will push the overall growth rate to 7.2 per cent for the full year, April 2022 to March 2023.
But this growth indicator is not a monolith; several components also show we are doing many a thing right. During the quarter in discussion, agriculture growth accelerated to 5.5 per cent from 4.1 per cent. Electricity, gas, water supply and other utility services segment also grew 6.9 per cent during the fourth quarter from 6.7 per cent in a year-ago period.
The GVA growth in the services sector, comprising trade, hotel, transport, communication and services related to broadcasting, was 9.1 per cent in the fourth quarter, against a growth of only five per cent a year ago, according to data from the ministry of statistics and programme implementation.
Prime Minister Narendra Modi said that the 2022-23 GDP growth figures underscores the resilience of the Indian economy amidst global challenges. This robust performance, along with overall optimism and compelling macro-economic indicators, exemplify the promising trajectory of the Indian economy and the tenacity of its people.
Reserve Bank of India governor Shaktikanta Das said last week that the last two quarters of the previous financial year have seen a strong momentum. In the October-December quarter, there was a pent-up demand, which supported economic activity. All economic indicators in the fourth quarter showed that economic activities had sustained the momentum. RBI monitors about 70 high-frequency indicators, and almost all of them have maintained a good positive momentum.
There is euphoria about the fourth quarter performance, mainly boosted by government and private capital spending. However, the road ahead will not be smooth.
Rise in home loan EMIs, its impact on household budgets, impact on consumption demand, contraction in exports and its impact on employment, and impact of a potential El Nino on crops, food prices and farm incomes needs to be taken into consideration. There are also indications that passenger vehicle demand is subdued for small cars and concerns are growing for medium and heavy commercial vehicle sales.
FMCG companies suggest continued pressure from weaker rural demand due to inflation. IT companies have scaled back revenue and hiring guidance for FY24 due to global developments. These will weigh on the services sector, even as freight segments and tractor sales have been on a softer side.
Overall we are doing good but must be cautiously optimistic.