India’s GDP grows at 6.3 pc in Jul-Sept quarter

New Delhi: Chief Economic Advisor V Anantha Nageswaran on Wednesday said the country’s gross domestic product (GDP) growth at 6.3 per cent during the second quarter (July-September) is in line with most market participants’ expectations.

India’s growth estimates, which were to the north of 8 per cent or even 9 per cent at the beginning of the year, have come down to between 6.8 per cent and 7 per cent, because global growth has slowed down and monetary tightening is still underway in the developed world, the CEA said during a briefing on Wednesday. He said export growth will not be able to contribute as much as it did last year and that is a reason why these estimates have come down from the beginning of the year.

He said the robust growth continues after the recovery in 2021-22. India’s growth was higher during the first half of 2022-23 across major economies like Indonesia which had 5.7 per cent, UK (2.4 per cent), Mexico (4.3 per cent), France (1 per cent), China (3.9 per cent), US (1.8 per cent), Japan (1.9 per cent).

Talking about broad-based growth across sectors, he said the pickup in investment activity happened with a share of private final consumption expenditure (PFCE) in real GDP at 58.4 per cent in the September quarter (Q2) of 2022-23, the highest in Q2 of the past 10 years.

The share of exports in real GDP increased to 23.3 per cent in the September quarter (Q2) 2022-23, the highest in the September quarter since 2014-15, he said, adding investment rate stood at 34.6 per cent in the September quarter (Q2) 2022-23, the highest in Q2 since 2013-14.

All sectors are estimated to have crossed pre-pandemic levels of Q2 2019-20, the CEA said.

Manufacturing activity expansion continues in the December quarter (Q3) of FY23 while services activity expansion continues in Q3 of FY23, he said, adding that in an uncertain external environment, domestic demand is expected to drive GDP growth.

Nageswaran said the domestic inflation is expected to ease further on the back of softening global commodity prices and expectations of a good rabi crop.

He said the corporate earnings outlook would improve as price pressures become moderate and improving supply chains.

On the lines of liquidity of the banks, he said strengthening credit growth and flow of financial resources to the commercial sectors point to sustained momentum in activity banks.

A stable banking sector is a major source of resilience amidst formidable global headwinds, the CEA said and noted that improvement in banks’ balance sheets has helped credit growth.