India’s GDP in the April-June quarter grew 13.5% to Rs 36.85 lakh crore, a growth rate that is 2.7 percentage points lower than the Reserve Bank of India’s forecast. A small part of the underperformance in the growth rate is on account of an upward revision in the previous year’s GDP number.
The three takeaways from the data are that on the production side, all sectors except contact services such as hotels and trade have crossed the pre-pandemic level. Consequently, the GDP is also above the pre-pandemic level. The economy has come out of shock induced by the outbreak of Covid-19, but the recovery in contact intensive sectors is still lagging.
Also read: India’s GDP grows at 13.5% in Q1 of FY23
The manufacturing sector in the April-June quarter of 2022-23 grew just 4.8% to Rs 6.05 lakh crore. It’s underwhelming and the likely cause is the damaging fallout of the Russia-Ukraine conflict which is slowing down global economic momentum.
One of the bright spots of the GDP data is the performance of private consumption which at Rs 22.07 lakh crore in the April-June quarter is well above the level recorded in the corresponding pre-pandemic period. However, there are unfavourable factors building up such as an increase in the price of crude oil over the last few days. The Indian basket of crude has increased over 10% in a couple of weeks to hit $102/barrel on August 30.
In all, it’s a mixed performance. The next couple of months could be tricky as the global slowdown takes effect even as oil prices remain elevated. It’s a challenging period for both RBI and the union government’s economic policy makers.
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