Ukraine war takes toll, Indian economy slows to 4.1% in fourth quarter

Tribune News Service

New Delhi, May 31

The Indian economy grew at its slowest pace in a year during the January-March quarter, pulling down the GDP growth in the full fiscal 2021-22 to 8.7 per cent as Russia’s invasion of Ukraine added a new inflation hurdle to the recovery.

The gross domestic product (GDP) expanded by 4.1 per cent in the final quarter of 2021-22, according to data released by the statistics ministry. The Q4 growth was slower than Q3’s 5.4 per cent expansion, 8.4 per cent in Q2 and 20.1 per cent in Q1.

For the full year (April 2021 to March 2022), India’s economic growth of 8.7 per cent was lower than the 8.9 per cent the ministry had projected three months ago.

Though these figures were much lower than the Reserve Bank of India’s (RBI) projections, Chief Economic Advisor Anantha Nageswaran said the actual figures were much better than what many in the private sector had anticipated due to the Omicron wave in January, thanks to a “very robust” performance in exports.

“We will, of course, be affected by what is happening in the rest of the world,” he said, attributing 2 per cent of the inflation to the high prices of imported commodities such as oil, which is at $120 per barrel. He also admitted that contact industries were yet to climb to pre-pandemic levels.

“Stagflationary risks for India are quite low compared to the rest of the world. There is considerable momentum in economic activity as witnessed by the GST numbers in April,” he said.

Looking ahead, the Chief Economic Advisor said in the current fiscal, agriculture production in the ongoing rabi season would be 1.2 per cent higher. Coupled with the projections of a normal monsoon, there will be fairly brisk growth in rural income, which in turn will trigger higher rural demand. With the PMI of manufacturing and services ruling above 50 levels, which marks the neutral level, Nageswaran said this meant that both were in “expansion territory”.

Besides, the combined index of eight core industries stood at 143.2 in April 2022, which is an increase of 8.4 per cent (provisional) as compared to the index of April 2021. The production of coal, electricity, refinery products, fertilisers, cement and natural gas industries increased in April 2022 over the corresponding period of last year.

The Chief Economic Advisor defended the government’s attempts to control inflation by pointing out that India was not an isolated case. In fact, he said, the inflation level in India was somewhat better than was the case with several developed and developing countries.

Shrunk 6.6% in FY21

• In FY21, GDP contracted 6.6% as Covid disrupted businesses
• 4.1% Q4 expansion lowest in FY22; stood at 20.1%, 8.4%, 5.4% in Q1, Q2 and Q3
• Real GDP grew to Rs 147.3 lakh cr from Rs 135.58 lakh cr in FY21

All GST dues cleared

• The Centre has cleared entire GST relief payable to states to date, releasing Rs 86,912 cr
• Rs 25,000 cr released from GST compensation fund, rest from Centre’s own resources pending collection of cess inside

Q4 Sector-wise Agriculture 3% | Finance, realty 4.2% | Manufacturing 9.9% Trade, hotels 11.1% | Mining 11.5% | Construction 11.5% | Public admn 12.6%

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