India’s July-September quarter GDP growth falls to 6.3 pc

India’s gross domestic product (GDP) for the July-September period grew by just 6.3 per cent in 2022.

The official figures released on Wednesday by the government indicate real GDP at Rs 38.17 lakh crore, a drop from the growth of 13.5 per cent witnessed in April-June and 8.4 per cent in the same quarter last year.

However, this was expected by experts considering the general slowing down of growth due to global turmoil and a recession on its way. Besides, the high number of 13.5 per cent in the first quarter was also due to the low base of the first quarter of the last financial year, when economic activity was lethally impacted by the second wave of the Covid-19 pandemic.

Analyst estimates for Quarter 2 (July-September) had ranged from 5.8 per cent to 7 per cent. SBI research, for example, had pointed out weakness in the manufacturing sector, as well as a decrease in corporate margins. While India Inc found business picking up robustly after the pandemic dip, the increase in raw material costs, and logistics among others, meant that profits had come down.

With the war in Ukraine stretching on and China facing its own issues ranging from real estate meltdown, Covid lockdowns and civil unrest, the geopolitical uncertainty is expected to add to the economic woes of a beefed up dollar, slowdown in exports and recession trends in many of the world’s leading economies.

Industrial activity released just before the GDP figures show that petroleum and natural gas output, and cement production declined in October of this year compared to the previous year. The overall core industry growth increased by just 0.1 per cent. Other indicators like the production of rice and cargo handled at airports also showed a drop.

This, even as the fiscal deficit has ballooned to 7.58 lakh crore rupees, or more than 45 per cent of the annual estimates. In the year-ago period, the deficit was 36.3 per cent.

Reserve Bank of India had lifted interest rates by 190 basis points since May in an effort to tame price rise (inflation) and to prevent weakening of demand due to inflation.

“Global inflation will persist and pressure on our domestic inflation as well…we need to take adequate steps to offset downside external risks,” said Finance Minister Nirmala Sitharaman ahead of the GDP figures unveil, expressing hope that inflation will come down to the tolerance levels set by the government (below 6 per cent) by mid-next year.

Many international rating agencies have been correcting downwards the annual GDP growth of India this financial year. While Moody’s pegged India to grow at 8.8 per cent in May, it slashed it down to 7.7 per cent by September and again to 7 per cent earlier this month. Similarly, Fitch lowered the figure from 7.8 per cent to 7 per cent while India Ratings lowered it from 7 per cent to 6.9 per cent. Both S&P Global and CRISIL revised it from 7.3 per cent to 7 per cent a few days ago.