Q1 GDP: Indian economy grows at one-year high of 13.5%

After losing steam in the last quarter of fiscal 2022 amid headwinds from ongoing geopolitical tensions, a rise in inflation and monetary policy measures, the Indian economy hit a double-digit growth of 13.5% year-on-year during the April-June quarter, on a low base and improved economic activities, the government data released today shows.

Though lower than the expectations of analysts, the Q1 FY23 GDP hit a one-year high, which is also a sharp uptrend from 4.1% GDP growth in the previous quarter. However, it is still lower than the 20.1% economic growth recorded during the same quarter last year.

"Real GDP at constant (2011-12) prices in Q1 2022-23 is estimated to attain a level of ₹36.85 lakh crore, as against ₹32.46 lakh crore in Q1 2021-22, showing a growth of 13.5% as compared to 20.1% in Q1 2021-22," says the Ministry of Statistics and Programme Implementation (MoSPI).

Gross value added (GVA) at constant prices was recorded at 12.7% in this period, as compared to 18.1% during the same quarter last year and 3.9% during the previous quarter.

Public administration, defence and other services grew the highest at 26.3% vs 6.2% during the same period last year; followed by trade, hotels, transport, communication and services related to broadcasting (25.7% vs 34.3% during Q1 FY22) and construction (16.8% vs 71.3% during Q1 FY22). The agriculture, forestry and fishing sectors grew at 4.5% as compared to 2.2% growth during the same period last year.

"Nominal GDP or GDP at current prices in Q1 2022-23 is estimated at ₹64.95 lakh crore, as against ₹51.27 lakh crore in Q1 2021-22, showing a growth of 26.7% as compared to 32.4% in Q1 2021-22," says MoSPI.

The economic growth in the first, second, third and fourth quarters of 2021-22 stood at 20.1%, 8.4%, 5.4%, and 4.1%, respectively. For the full fiscal year 2021-22, the country's GDP stood at 8.7%, against a contraction of 6.6% in the previous fiscal.

The central bank in its previous monetary policy announcement had pegged the country's GDP growth at 16.2% in the first quarter of 2022-23.

Earlier, most economists, in line with the Reserve Bank's estimates, had also hoped for double-digit GDP growth in the said quarter of 2022-23.

SBI Research's nowcasting model showed India's economy in the first quarter growing at 15.7%, with a large possibility of an upward bias.

It said the growth indicators suggested more than just a ‘low base’ contributing to growth as the SBI CLI Index -- a basket of 41 leading indicators -- showed a significant acceleration.

"Out of the 41 high frequency leading indicators, 89% showed an acceleration in the first quarter, compared to 75% in the same period last year. This shows the growth momentum in the first quarter was strong and broad-based," Soumya Kanti Ghosh, the group chief economic adviser at State Bank of India, said.

Similarly, ratings agency ICRA also said the country's GDP growth was projected to spike to a four-quarter high of 13% in the April-June quarter. “The anticipated double-digit GDP expansion in Q1 FY2023 benefits from the low base of the second wave of Covid-19 in India in Q1 FY2022 as well as the robust recovery in the contact-intensive sectors following the widening vaccination coverage,” said Aditi Nayar, chief economist, ICRA.