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“ The Q3 GDP growth rate falling is a surprise development. The effects of the pandemic are fast fading and growth was expected to pick up the pace. Q3 was also the quarter of the festive season, so high consumption normally pushes up the demand. Negative growth in construction space is worrying, despite heavy public spending by the government. The slowdown in the growth rate reflects the absence of private spending. A rise in inflation and energy prices will likely put pressure and pull down the full-year growth rate.

The slowdown in the growth may force the government to rethink the heavy Capex expenditure planned in the Budget for FY23. A falling growth will also have a bearing on the revenue collection for the government. A sustained pick-up in economic activities, crude price staying in a range and a good monsoon year are required to get the growth rate back on track.”