GDP hits slow lane in Q3, sees 5.4% growth

New Delhi: India's economic growth slowed to 5.4 per cent in the third quarter of 2021-22, but higher than China's GDP expansion of four per cent during the same period and the country retained its position as the world's fastest growing major economy.

In the current fiscal, GDP growth stood at 20.3 per cent in April-June quarter and 8.5 per cent in July-September period. The National Statistical Office (NSO) in its second advance estimates of national accounts released on Monday pegged the country's growth for 2021-22 at 8.9 per cent, a tad lower than 9.2 per cent estimated in its first advance estimates released in January. Besides, NSO revised its estimates of GDP contraction for the coronavirus pandemic-hit last financial year (2020-21) to 6.6 per cent. Earlier, the estimate was 7.3 per cent contraction.

Indian economy contracted 23.8 per cent in April-June in 2020 and 6.6 per cent in July-September quarter in 2020.

"While an adverse base was expected to flatten growth in Q3 FY2022, the initial estimates of the NSO are sorely below our expectations (6.2 per cent for GDP), with a marginal rise in manufacturing and a contraction in construction that is surprising despite the heavy rainfall in the southern states," Aditi Nayar, chief economist at ICRA, said.

"GDP at constant (2011-12) prices in Q3 of 2021-22 is estimated at Rs 38.22 lakh crore as against Rs 36.26 lakh crore in Q3 of 2020-21, showing a growth of 5.4 per cent," an official statement said. According to the statement, real GDP or Gross Domestic Product (GDP) at constant (2011-12) prices in 2021-22 is estimated to attain a level of Rs 147.72 lakh crore as against the first revised estimate of GDP for the year 2020-21 of Rs 135.58 lakh crore, released on January 31, 2022. The growth in GDP during 2021-22 is estimated at 8.9 per cent as against a contraction of 6.6 per cent in 2020-21. In value terms, GDP stood at Rs 38,22,159 crore in October-December 2021-22, higher than the Rs 36,22,220 crore in the corresponding period of the 2020-21. According to NSO data, Gross Value Added (GVA) growth in the manufacturing sector growth remained almost flat at 0.2 per cent in the third quarter of 2021-22, compared to a growth 8.4 per cent a year ago.

Farm sector GVA growth was slow at 2.6 per cent in the third quarter compared to 4.1 per cent growth a year ago. Construction sector GVA declined by 2.8 per cent as against a growth of 6.6 per cent a year ago. Mining sector grew by 8.8 per cent, as against a contraction of 5.3 per cent. Electricity, gas, water supply and other utility services segment posted a growth of 3.7 per cent in the third quarter of this fiscal against 1.5 per cent expansion a year ago. Similarly, trade, hotel, transport, communication and services related to broadcasting grew by 6.1 per cent compared to 10.1 per cent contraction a year ago. Financial, real estate and professional services growth stood at 4.6 per cent in Q3 FY22 compared to a growth of 10.3 per cent.

Public administration, defence and other services grew at 16.8 per cent during the quarter under review compared to 2.9 per cent contraction a year earlier. Meanwhile, China recorded a growth of 4 per cent in the October-December period of 2021.

Growth Curve

♦ China's GDP grew at 4% in Q3

♦ India's growth was 8.5% in Q2

♦ GDP growth was20.3% in Q1 on low base effect

♦ Economy contracted 23.8% in Q1/2020 and 6.6% in Q2/2020

♦ GDP at constant (2011-12) prices in Q3/FY22 estimated at Rs38.22 lakh crore as against Rs36.26 lakh cr in Q3 of 2020-21