The government on Thursday reported that economy might have grown at 7.2 per cent in the Fiscal Year 2022-23 (FY23) aided by strong growth in January-March quarter of FY23 at 6.1 per cent. GDP growth in FY22 was 9.1 per cent.

Prime Minister Narendra Modi says FY23 figures underscore 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 our economy and the tenacity of our people,” he said in a tweet.

In a series of tweets, Finance Ministry said that India was the fastest-growing major economy over the last fiscal and in the quarter ending March 2023 as well. “Growth in the year was driven by robust private consumption and a sustained increase in capital formation,” it said.

Taking it forward, Chief Economic Advisor V Anantha Nageswaran hopes India to have another solid performance during the current fiscal with risk evenly balanced. The government and RBI expect growth rate to be 6.5 per cent while agencies such as IMF and OECD projects sub-6 per cent growth.

Agriculture and services

In FY23, agriculture and services showed better performance while industry declined. In the fourth quarter, the growth is 8.4 per cent is higher compared to 3.7 per cent in the previous quarter, reflecting the sustenance of growth momentum in Q4. On the demand side, the growth has been driven by Gross Fixed Capital Formation and exports. On the supply side, the growth has been driven by agriculture, manufacturing, construction, trade, hotels, transport, communication & services related to broadcasting and financial, real estate and professional services.

For the current fiscal, Nageswaran reiterated 6.5 per cent growth estimate and said the risks are evenly balanced between the downside and the upside to this estimate.

“We are very pleased to have been able to present a story of both sustained economic momentum combined with micro economic financial and fiscal stability and we look forward to another year of solid economic performance by India,” he said. 

Rate hike impact

Commenting on the latest number, Dharmakirti Joshi, Chief Economist with Crisil, says FY23 growth comes on a higher base – due to upward revision of fiscal 2022 data. “We expect the economy to slow to 6 per cent this fiscal due to spillover to exports from a slowing world and some impact of interest rate hikes on interest sensitive segments. Even at 6 per cent, India will be the fastest growing G-20 economy this fiscal,” he said while adding that as for agriculture output and prices, the eyes are riveted on monsoon.

Rajani Sinha, Chief Economist with Care, also expects the GDP growth to moderate to 6.1 per cent in FY24 due to combination of factors including normalisation of base, slowing domestic discretionary demand, subdued external demand and financial uncertainties. Rising rural wages, record foodgrains production and expectation of lower food inflation bodes well for the rural demand outlook.

However, “development of El-Nino conditions during the monsoon season is a key risk for agriculture production and rural income. Overall, the share of private consumption in GDP could witness a marginal fall. Investment demand is expected to remain robust, however, global growth slowdown and financial uncertainties could weigh on business optimism,” she said.