Q3 FY23 GDP growth slows down by 4.4%, dented by rate hikes, falling demand

The country’s Gross Domestic Product (GDP) for the October-December 2022 quarter moderated to 4.4 per cent, data shared by the Ministry of Statistics and Programme Implementation showed on Tuesday. 

“GDP at constant (2011-12) prices in Q3 2022-23 is estimated at Rs 40.19 lakh crore as against Rs 38.51 lakh crore in Q3 2021-22, showing growth of 4.4 per cent. GDP at current prices in Q3 2022-23 is estimated at Rs 69.38 lakh crore as against Rs 62.39 lakh crore in Q3 2021-22, showing growth of 11.2 per cent,” a government press release stated. 

According to the data, the Indian economy is expected to grow at 7 per cent in FY23. It also stated that the economic growth for 2021-22 has been revised upwards to 9.1 per cent from 8.7 per cent earlier.

The GDP had moderated to 6.3 per cent in the last quarter (Q2) from 13.5 per cent in the first quarter (Q1) of FY23 largely due to pandemic-related statistical distortions. 

The manufacturing sector contracted by 1.1 per cent over the previous quarter when it had contracted 3.6 per cent. Meanwhile, farm sector recorded growth of 3.7 per cent in Q3 as against 2.4 per cent in Q2. 

The mining sector surged to 3.7 per cent in Q3 as compared to a contraction of 0.4 per cent in the previous quarter. Electricity and construction sectors witnessed an increase of 8.2 per cent and 8.4 per cent respectively during Q3 as against 6 per cent and 5.8 per cent respectively in Q2. 

Contact-intensive sectors like hotels and transport declined sharply to 9.7 per cent as against 15.6 per cent in Q2. Real estate grew at 5.8 per cent as compared to 7.1 per cent in Q2. Meanwhile, defence sector grew by 2 per cent in the October-December 2022 quarter as against 5.6 per cent in July-September 2022 quarter. 

Lower GDP growth can be attributed to aggressive rate hikes by the RBI in order to tame high inflation levels in the country. 

Besides, slowdown in exports and consumer demand has also contributed in bringing down the GDP numbers. The dent in consumer demand can be linked with the bullish rate hikes by the RBI to bring down inflation in the past few months. Meanwhile, slowdown in external demand could be a consequence of the rate hikes by major central banks around the world. 

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