Chief Economic Advisor V Anantha Nageswaran, on Thursday, said that the urban economy is growing faster than rural economy. He also expects not just Q3 (October-December) of FY23, but the whole of fiscal growth numbers to be revised upwards. Further, he felt that there is still pent-up demand in the economy.  

“Given the high-frequency indicators and the pace at which they are recovering, I do believe that the current year’s are more likely to revised upward than downward,” he said. Earlier this week, the National Statistical Office (NSO) revised GDP growth data for the past three years — 2019-20, 2020-21 and 2021-22 — and also released the second advance estimates of GDP for 2022-23.

While the growth rate for 2021-22 has been revised up by 40 basis points to 9.1 per cent, from 8.7 per cent, the GDP for 2020-21 (Covid year), too, has been revised upwards to (-) 5.8 per cent, from (-) 6.6 per cent. For 2019-20 also, the growth has been revised upwards to 3.9 per cent, from 3.7 per cent. However, the second advance estimates for 2022-23 real GDP growth was retained at 7 per cent as was projected in the first advance estimates in January.

Real GDP or GDP at constant (2011-12) prices in the year 2022-23 is estimated at ₹159.71-lakh crore, against the first revised estimate of GDP for the year 2021-22 of ₹149.26-lakh crore. First advance estimate for Q3 projects growth at 4.4 per cent.

Nageswaran said the rising interest rates need not necessarily be a cause of lower growth, but it only reflects the fact that there is healthy underlying demand for credit. Real interest rate is not very high at the moment, he said, adding there is pent-up demand in certain sectors.

About rural inflation remaining high, he said it doesn’t take into account the fact that bulk of the population may be getting their essential food grains at zero cost. On the economic benefit of digitisation, he said digital transactions enable increase in formalisation.

“My guesswork is that it is adding between 30 and 50 basis points per annum to the provisional GDP. Nobody has yet done the proper estimation of what the digital infrastructure is adding to overall potential economic growth [and] that needs to be worked out,” he said.