Indian GDP in the April-June quarter grew 13.5% to Rs 36.85 lakh crore, a growth rate 2.7 percentage points lower than the Reserve Bank of India forecasts. A small part of the growth rate underperformance is due to an upward revision of the previous year’s GDP value.
The three findings of the data are that on the manufacturing side, all sectors except contact services such as hotels and retail have passed the pre-pandemic level. As a result, GDP is also above the pre-pandemic level. The economy has recovered from the shock induced by the Covid-19 outbreak, but recovery in contact-intensive sectors is still lagging behind.
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The manufacturing sector in the April-June quarter of 2022-23 grew only 4.8% to Rs 6.05 lakh crore. It is disappointing and the likely cause is the damaging fallout of the Russia-Ukraine conflict, which is slowing global economic momentum.
One of the bright spots in the GDP data is the performance of private consumption, which at Rs 22.07 lakh crore in the April-June quarter is well above the level recorded in the corresponding pre-pandemic period. However, unfavorable factors are accumulating such as the increase in the price of crude oil in recent days. India’s crude oil basket rose more than 10% in a couple of weeks to hit $ 102 a barrel on August 30th.
In all, it is a mixed performance. The next couple of months could be tough as the global slowdown takes effect even as oil prices remain high. It is a difficult time for both the RBI and the economic policy makers of the union government.
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