Growth slowed to 3.9% in March quarter, says poll

NEW DELHI: India’s economic growth likely slowed to a oneyear low of 3.9% in the quarter ended March from 5.4% in the preceding three months, a Mint poll of 21 economists showed ahead of the official data release next Tuesday. The third covid-19 wave led by the Omicron variant is largely to blame for the slow pace of economic recovery.

While mobility curbs were brief during the third wave, other factors such as global supply shortages due to the Ukraine war and higher input costs further slowed the expansion rate.

The median prediction for GDP growth was 3.9%. This translates into an 8.7% growth for the full fiscal year 2021-22, the highest rate in five years, bumped up by an acute base effect.

“GDP growth (in March quarter) likely skidded on account of higher commodity prices on margins, the decline in wheat yields and the hiccups in the recovery of the contact-sensitive services attributable to the third wave, as well as a high base,” said Aditi Nayar, chief economist at ICRA Ratings. She added that agriculture and industry were likely to post a growth rate of less than 1% in gross value added, while services growth was likely around 5.4%.

Growth has been hit since the pandemic struck two years ago, slowing an already sluggish Indian economy. Moreover, Russia’s war in Ukraine and a slowing global economy have significantly impacted India’s economic growth. The International Monetary Fund has slashed India’s economic growth projection for the FY23 to 8.2% from 9% predicted in January, citing the impact of the war on prices and supply-chain disruptions.

Given that over 80% of India’s fuel requirements are imported, the country has faced the brunt of oil prices remaining in triple digits since the war began. Last week, the government reduced excise duty on petrol by ₹8 per litre and on diesel by ₹6 per litre to cushion the blow to consumers battered by high fuel prices.