The Indian economy managed to beat the odds in Q4 with real GDP growing by 4.1% as against 2.8% last year.
The provisional estimates released Tuesday also show real GDP in FY22 growing by 8.7% as against a contraction of 6.6% in FY21. The latest print is lower than the National Statistics Office's (NSO) February estimate of 8.9%, which itself was revised downwards from the 9.2% projected in January.
Likewise, the Q4 output is lower than the government's initial estimate of 4.8% growth made in February, but higher than private estimates, which pegged growth at about 2-3.5%.
Real GDP printed at Rs 40.78 lakh crore in Q3, FY22 as against Rs 39.18 lakh crore a year ago. On a sequential basis, growth stood at 6.7%, confirming the steadiness in India's growth story despite uncertainties stalking the recovery process.
The December quarter GDP data firmed up hopes of the economy being thawed to its pre-freezed (pre-pandemic) levels, and notwithstanding the initial setbacks of the third wave of Covid-19 infections, national output in Q4 was to pack more wallop. The Ukraine-Russian war, persistent inflation and global supply shocks, though, have darkened the mood.
In fact, this triple-whammy is threatening to knock the skulls out of the global economy. As it is, in the January-March quarter, the US economy grew in reverse, while the World Bank has already issued its customary recessionary warning, though not every catastrophic forecast turns true.
Though headline numbers appear somewhat satisfactory, there is undeniable pain in the sub-components that make up the GDP. For instance, on the expenditure side, the two key components -- consumption and investment together accounting for a staggering 88% of the GDP -- are still covered in cuts and bruises.
Consumption, which accounts for 56% of the GDP, fell in Q4 over Q3, while it barely kept up last year's momentum. Given the rapid onset of infections in January, the setback in consumption is understandable.
The good news though is, investments are exhibiting signs of healing with gross fixed capital formation rising sequentially and annually. Investments grew, albeit at a weaker pace, all through FY22. Having crossed past the pre-pandemic level in Q3, any slip up here or even stagnation would deliver a huge blow. Government expenditure, which held the fort during the tough pandemic years of FY20 and FY21, too maintained the spirit of spending in Q4 and throughout FY22.
Meanwhile, the eight sub-components of the national output are a mixed bag with some doing well, but others struggling.
Agriculture and allied sectors saw a sequential growth of 4.1% in Q4, but over the previous year, it barely moved a muscle. The big disappointment is manufacturing that slipped back into negative territory, though it did register growth on a sequential basis.
Construction, which slipped into the negative zone in Q3, found a fresh wind and sprung back with a 2% growth in Q4 over last year, while the services sector comprising trade, hotels, financial services and public administration surprisingly held up well notwithstanding the third wave of Covid-19 infections.
But the pace may need to pick up significantly given the uncertainties.
According to the RBI, the Indian economy's recovery remains resilient although risks stemming from global developments have thwarted the momentum. It also cited persistent inflation throwing a spanner in the works. In order to achieve a higher growth path on a sustainable basis, private investment needs to be encouraged through higher capital expenditure by the government, it noted early this month.