The gross domestic product in the July-September quarter was Rs 38.16 lakh crore which is 6.3% higher than the corresponding period a year earlier. The growth rate was in perfect sync with RBI forecasts. The central bank has forecast that GDP will grow by 4.6% for the remaining two quarters of 2022-23.
The most important findings of the data are that the economy is doing well and has truly made it through the disruption caused by the pandemic. However, there are signs that both slowing global economic momentum and a tightening interest rate environment are taking their toll.
Manufacturing output in the July-September quarter contracted by 4.3% to Rs 5.98 lakh crore. The contraction was partly due to an upward revision of the previous year’s production number, but there are early signs that economic growth will face challenges in the coming quarters.
The woes in the manufacturing sector are partly offset by increased government capital expenditure and a full return to normalcy which has helped contact-intensive services. As a result, gross fixed capital formation in July-Sep quarter increased by 10.4% to Rs 13.21 lakh crore and private consumption expenditure grew by 9.7% to Rs 22.29 lakh crore .
Going forward, the RBI should reconsider the pace at which it is raising its official interest rate. Visible signs of trouble in the manufacturing sector suggest there is a reason to slow monetary tightening.
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