Indian economy expected to grow at 7% in 2022-23, says government data

Construction sector’s GVA is reckoned to grow 9.1% through the year. Photo used for representation purpose only.
| Photo Credit: The Hindu

India’s real GDP is expected to grow 7% in 2022-23, slowing from 8.7% in FY22, as per the First Advance Estimates of National Income for the year released by the National Statistical Office (NSO) on Friday.

With GDP estimated to have clocked a 9.7% uptick in the first six months, the advance estimate implies that growth will moderate to 4.5% in the second half.

The NSO’s estimate is based on limited data, with almost three months to go in the year, and essentially serves as an input for the Union Budget formulation exercise. Economists said some of the assumptions made about the second half were overtly rosy or grim — and could bode significant revisions ahead.

For instance, the NSO has assumed a 0.2% contraction in private consumption spending between October 2022 and March 2023, but optimistically expects an almost 12% rise in exports.

For the full year, gross value added (GVA) is expected to rise 6.7%, compared with 8.1% in 2021-22, with trade, hotels, transport and communication services recording the highest GVA expansion of 13.7%. Manufacturing and mining GVA are estimated to grow just 1.6% and 2.4% in 2022-23, compared with 9.9% and 11.5, respectively, last year.

Agriculture GVA is expected to accelerate to 3.5%, from 3%, but is only expected to rise 2.7% in the second half.

“With sowing up 4.5% till December 30, improved fertiliser availability and healthy reservoir levels, we expect Rabi sowing this year to rise 1% to 2% in 2022-23, which would contribute to agricultural GVA growth of 3-4% in the second half,” said Aditi Nayar, chief economist at rating firm ICRA.

Construction sector’s GVA is reckoned to grow 9.1% through the year, with electricity, gas, water and other utilities’ GVA rising 9%. Financial, real estate and professional services’ GVA is expected to grow 6.4% in 2022-23, from 4.2% in 2021-22.

GVA from public administration, defense and other services (which include health, education, recreation and other personal services) is expected to grow 7.9%, compared with 12.6% in 2021-22.

“All sectors, barring manufacturing, are expected to do well this year,” said Bank of Baroda chief economist Madan Sabnavis. “While consumption has grown 16%, this is mainly due to the inflation impact besides pent-up demand and is reflected in the GST collections,” he added.