Ukraine war, inflation restrict Q4 GDP growth at 4.1%, FY22 growth at 8.7%

The Indian economy lost steam in the last quarter of fiscal 2022 amid headwinds from ongoing geopolitical tensions, subsequent rise in inflation and monetary policy measures to curb it. The gross domestic product of the country increased 4.1% year-on-year during the March quarter, shows government data released today.

"GDP at constant prices (2011-12) in Q4 2021-22 is estimated at ₹40.78 lakh crore, as against ₹39.18 lakh crore in Q4 2020-21, showing a growth of 4.1%," says the Ministry of Statistics and Programme Implementation (MoSPI).

This brings the GDP growth for the March quarter to an one-year low despite managing to outdo expectations by most analysts. The economic growth in the first, second and third quarters stood at 20.1%, 8.4% and 5.4%, respectively.

Meanwhile, GDP growth for the full fiscal 2022 stood at 8.7%, against a contraction of 6.6% in the previous fiscal.

"Real GDP at constant prices (2011-12) in the year 2021-22 is estimated to attain a level of ₹147.36 lakh crore, as against the first revised estimate of ₹135.58 lakh crore for the year 2020-21, released on January 31, 2022. The growth in GDP during 2021-22 is estimated at 8.7% as compared to a contraction of 6.6% in 2020-21," says MoSPI.

Gross value added (GVA) at constant prices for the quarter under review slipped to 3.9%. The manufacturing sector took a significant hit amid rising commodity and fuel prices and supply crunch, registering a contraction of 0.2% during the March quarter.

Some colour returned to the cheeks of the agriculture sector, which grew at 4.1% in the fourth quarter of FY22, coming out of a decline in the third quarter. Public administration, defence and other services sector registered the highest growth during the March quarter at 7.7%.

As per government data, share of individual expenditure in GDP declined during the March quarter, evidenced in private final consumption expenditure (PFCE), which slipped to 55.5% in Q4 from 61% in Q3.

Meanwhile, share of government final consumption expenditure (GFCE), which reflects government's expenditure, in GDP increased to 11.3% in Q4 from 9.3% in Q3. Share of gross fixed capital formation (GFCF) increased to 33.6% during the quarter under review, as opposed to 30.1% in the previous quarter.

While share of exports in GDP remained stagnant at 20.8% during the March quarter, the share of imports declined to 25.8% from 26.8%.

Meanwhile, India's fiscal deficit for the financial year 2021-22 stood at 6.71% of the GDP, lower than the 6.9% projected in the finance ministry's revised estimates, shows government data released today.

The revenue-expenditure data released by the Controller General of Accounts (CGA) shows the fiscal deficit in absolute terms in 2021-22 stood at ₹15,86,537 crore (provisional). The revenue deficit at the end of the financial year stood at ₹10,32,947 crore (4.37%) in absolute terms.

As India was locked down due to the first wave of Covid, economic activity ground to a halt. That led to a high fiscal deficit of 9.5% in FY21. The Centre had initially pegged the fiscal deficit at 6.8% of the GDP, but the estimate was revised to 6.9% during Budget 2022-23.