IGI Logo

GDP growth of 5.4% in Q3 FY22 was less than the consensus expectations, as the base effect wanes. In fact, the second advance estimate of FY22 GDP growth has also been lowered to 8.9% from 9.1% in the first advance estimate. The slowdown in growth rate was witnessed across agriculture, manufacturing, followed by a de-growth in construction sector. The slowdown in manufacturing sector can be attributed to supply chain disruptions and semi -conductor shortages.  The impact of the Omicron wave will be seen in the Q4 GDP data. However, broadly with COVID concerns subsiding, economic indicators are expected to improve. Private consumption which comprised of 60 per cent of the nominal GDP has relatively revived back to pre-pandemic level. However, scope of rising inflation continues to threaten sustainable consumption recovery. Further headwinds to India’s domestic growth are likely to arise from sharp rise in oil prices causing expansion in import bills and threat of sharp rupee depreciation. The Russia – Ukraine standoff also poses some risk to global growth, with repercussion on India’s exports”.