8.7% growth in GDP in FY2022, Q4 dips to 4.1%

■ Data comes as govt, RBI make all-out efforts to tame inflation

Amid soaring inflation across the country, the Indian economy expanded at 8.7 per cent for the full financial year 2021-22 as against a contraction of 6.6 per cent in FY21, while it grew 4.1 per cent in the January-March quarter. However, the growth in the JanuaryMarch period was slower than the expansion in the earlier October-December quarter of 2021-22 at 5.4 per cent, the government data showed on Tuesday.

The data was released at a time when the government, in consultation with the Reserve Bank of India, is making its all-out efforts to tame the country’s record high inflation rate. The soaring inflation also forced the RBI to raise its key lending rates by 40 basis points in its last monetary policy.

“Real GDP at constant (2011-12) prices in the year 2021-22 is estimated to attain a level of `147.36 lakh crores, as against the first revised estimate of `135.58 lakh crores for the year 2020-21. For the full financial year 2021-22, the economy expanded at 8.7 per cent as against a contraction of 6.6 per cent in FY21, while India’s GDP grows 4.1 per cent in Q4,” the ministry of statistics and programme implementation said.

The ministry also said that nominal GDP, or GDP at current prices, in the year 2021-22 was estimated to attain a level of `236.65 lakh crores, as against `198.01 lakh crores in 2020-21, showing

a growth rate of 19.5 per cent. In a separate data, the fiscal deficit for 202122 worked out to be 6.71 per cent of GDP, lower than the 6.9 per cent projected by the finance ministry in the revised Budget estimates.

Reacting to the data, chief economic adviser Anantha Nageswaran said: “The Q4 GDP at 4.1 per cent is better than estimated. Besides, the

government capital expenditure on FY2021-22 has also fully been met. In the context of a developing country, recession is rarely on the cards. It is almost always a question of growth slowing down. While the Omicron variant of Covid-19 has hurt growth, India has managed to keep the momentum intact.”

On rising inflation across the country, Mr Nageswaran pointed out that the growth on inflation challenges were universal. “Inflation pressures elevated at seven per cent will remain elevated. India is better placed than some other countries as far as inflation is concerned,” he added.

The high growth figure for FY22 was largely due to a favourable base effect, with the economy having contracted by 6.6 per cent in FY21 because of the Covid-19 pandemic and intermittent lockdowns, which restricted economic activity.

Anticipating India’s strong resilience and speedy recovery, even finance minister Nirmala Sitharaman projected economic growth to be robust at 8.9 per cent in FY22, in an event held earlier this month.

Asia’s third-largest economy slowed down in the first quarter of 2022, mainly because of two factors — the slowdown of economic activity due to the spread of Covid-19’s Omicron variant and the geopolitical conflicts between Russia and Ukraine which had hindered supply chains.

“The rise in crude oil, food and fertiliser prices will weigh on household finances and spending in the months ahead,” international ratings agency Moody’s said in a note, cutting India’s growth forecast to 8.8 per cent from 9.1 per cent for the 2022 calendar year.