India’s Q1FY23 GDP – Analysis – Eurasia Review

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For FY22, India’s real gross domestic product grew at a rate of 8.7%, which is lower than preliminary estimates but better than the previous year. Given the current state of global markets, the Reserve Bank of India (RBI) maintained its projection of a growth rate of 7.2% for FY23. It is important to note that GDP growth actual for fiscal year 23 should be the first year since the removal of the base effect. It will also benefit from lower inflation, which is driven by central bank policy guidance. On August 31, the Ministry of Statistics and Program Implementation (MOSPI) released first quarter GDP data. The impressive growth rate of 13.5% was expected, but it was disappointing. Street consensus had pegged real GDP growth at around 15.5% for the first quarter of FY23, while the RBI pegged it at around 16.2%.

(NOTE: The financial year in India is a 12-month period which begins on April 1 and ends on March 31 each year. This is a period when income from any source is taxable, and it is also a period when the government is making various assessments and changes to the tax structure Throughout the article, the estimated figures have been taken into consideration after the assessment of the first quarter of the current fiscal year, that is, say FY23 or 2022-23, which was also compared to the previous fiscal year, i.e. FY22 or 2021-22.)

According to the Reserve Bank of India, India’s real gross domestic product grew at a rate of 13.5% in the three months ended June 30, 2022. This figure is lower than the estimate of 16.2% of the central bank for the first quarter of the financial year. Real Gross Domestic Product or GDP at constant prices (2011-12) in the first quarter of 2022-23 is expected to be around 36.85 lakh crore, which is higher than the previous year’s estimate of 32.46 lakh crore. On the other hand, the nominal gross domestic product or GDP at current prices during the same period is expected to be around 64.95 lakh crore, which is higher than the previous year’s estimate of 51.27 lakh crore. crore.

Data source: MOSPI

GDP and GVA change in Q1FY23

For the first quarter of the fiscal year, the country’s real gross domestic product (GDP) grew at a rate of 13.5%. This is better than the 4.2% growth rate of the previous year. It is also expected to grow at a rate of approximately 36.3% over the next two years. The impressive growth exhibited by the country’s economy in the first quarter of the current fiscal year is a clear indication that the country’s growth is on the right track.

The country’s real gross domestic product grew at a rate of 13.5% in the three months ended June 30, 2022. This figure is lower than the central bank’s estimate of 16.2% for the first quarter of exercise. For the first quarter of the current financial year, the GVA stands at 34.42 trillion rupees, which is higher than 30.53 trillion rupees in the previous year. This implies that the country’s economy grew by 12.7%.

Gross Value Added (GVA) growth has become a more realistic and comprehensive picture of the country’s macroeconomic situation in recent years. It is used alongside GDP to provide a more accurate assessment of the country’s overall economy. In the first quarter of the fiscal year, GVA is expected to grow at a rate of 15.5%.

Nominal GDP Q1FY23

Before adjusting for inflation, nominal gross domestic product is a more accurate measure of the country’s overall economic activity. It shows the level of activity and jobs that the country’s economy has generated. In the first quarter of the current financial year, the nominal GDP stood at 64.95 trillion rupees, which is higher than 30.53 trillion rupees in the previous year. On a pre-crisis basis, the country’s nominal GDP grew by 67.7%.

  • Let’s first look at private consumption expenditure, which posted positive growth of +39.5% in the first quarter of the current fiscal year. Indeed, private consumption rebounded and contributed significantly to the country’s overall growth.
  • In terms of government consumer spending, the total amount of money the country’s government spent in the first quarter of the current fiscal year increased by 10.7%. However, its share in the country’s overall economy fell by 160 basis points.
  • The growth of gross fixed capital formation also increased by +31.4% during the first quarter of the current financial year. Indeed, the private sector has contributed significantly to the overall growth of the country.
  • With regard to the VALUABLES sector, the country’s head of government went from Rs 0.32 trillion in the first quarter of the previous fiscal year to Rs 0.50 trillion in the first quarter of the exercise in progress. This is a positive development, but it shows that the government is still diverting much of its spending to idle assets.
  • Growth in merchandise exports increased from Rs 11.28 trillion in the first quarter of the previous fiscal year to Rs 14.63 trillion in the first quarter of the current fiscal year. This is a positive development, as it shows that the country’s economy has started to recover from the crisis.
  • The value of the country’s merchandise imports increased significantly in the first quarter of the current fiscal year. Indeed, the increase in the value of imports of various products has contributed to the overall growth of the country.

The good news for the private consumer sector is that it has started to recover from the crisis. However, the increase in the value of imports of various products has contributed to the country’s overall inflation. This is worrying, as it shows that the government is still unable to control rising prices.

Sector drivers for GVA FY22

The GVA growth of 12.7% in the first quarter of the current fiscal year can be broken down into different important sectors which can provide a clear indication of the direction of the country’s economy.

industry sector Q1FY23 GVA (INR) Q1FY23 on Q1FY22 Q1FY23 on Q1FY21
Agriculture 4,930 billion rupees 4.5% 6.8%
Mines, Quarries 0.85 trillion rupees 6.5% 25.62%
Manufacturing 6,050 billion rupees 4.8% 56.2%
Electricity, gas, water 0.89 trillion rupees 14.7% 30.5%
Construction 2.63 billion rupees 16.8% 100.0%
Commerce, Hotels, Transportation 5,600 billion rupees 25.7% 68.8%
Financial, Real Estate 8.8 trillion rupees 9.2% 11.7%
Public administration, Defense 4.66 billion rupees 26.3% 34.2%

GVA growth in the first quarter of the current fiscal year can be broken down into different important sectors which can provide a clear indication of the direction of the country’s economy. One of them is the commercial hospitality and transportation sectors, which have shown strong recovery from COVID lows. These sectors can contribute to the overall GDP growth of the country and boost the commercial industry of the country. On the other hand, manufacturing growth is expected to have strong externalities due to the low level of production.

Despite the various global factors that have affected the country’s economy, such as the war situation in Ukraine and rising prices, the steady growth of the country’s gross domestic product is still considered a positive development. Going forward, lower inflation should help boost the country’s real gross domestic product growth.

Vaibhav Tomar is research assistant

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