India GDP: A Long Road Out Of The Pandemic

Growth in the Indian economy slowed in the January-March quarter of 2022, as the third wave of the Covid-19 pandemic disrupted activity again. For the full financial year, India's GDP grew 8.7% year-on-year after it contracted 6.6% in the pandemic year.

While the recovery in 2021-22 has meant that the Indian economy has surpassed the levels it was at before the pandemic, cumulatively, growth over these two years is low. Most parts of the economy have seen only marginal growth compared to pre-pandemic levels.

Compared to FY20, the economy grew 1.8% in FY22 in real terms. However, because of inflation, the economy is 17.9% larger in nominal terms. Nominal GDP grew to an estimated Rs 236 lakh crore at the end of FY22, compared to Rs 200 lakh crore pre-pandemic.

Due to the pandemic, there was a loss of Rs 9.57 lakh crore in output during FY21 compared to FY20, said Soumya Kanti Ghosh, group chief economic advisor at the State Bank of India. However, there has been an increase in GDP of Rs 11.77 lakh crore during FY22. With this, GDP has surpassed pre-pandemic levels by Rs 2.19 lakh crore in FY22.

The gap between the nominal GDP growth and the real GDP growth has increased between Q2 FY20 and Q1 FY22 owing to higher inflation, Ghosh said. It moderated in Q2 and Q3 FY22 but increased modestly in the last quarter of FY22, Ghosh said.

In real terms, all sectors of the economy have exceeded the pre-pandemic levels, except for trade hotels, transport, communication and services related to broadcasting, which remains 10.9% below pre-pandemic levels.

The "trade, hotels, transport, communication and services related to broadcasting" is the only sector which is still not out of woods, Ghosh said. It is still Rs 3.04-lakh-crore less than the FY20 levels, said Ghosh. "We believe that by Q1 FY23 this sector will cross the pre-pandemic level," Ghosh said.

Construction, while showing activity higher than pre-pandemic times, has grown by just 1.9% in FY22 compared to FY20.

Private final consumption expenditure growth remains tepid at 1.4% in FY22, compared to FY20. Through FY22, private final consumption expenditure growth has continued to decelerate, rising by 1.8% in Q4.

In terms of share of GDP, private consumption accounted for 59.6% in current price terms, lower than the 61% share pre-pandemic.

Gross fixed capital formation share stay stable at 28.6%.

While the share of government consumption expenditure is also unchanged, in absolute terms, government final consumption expenditure grew by 6.3% in FY22 compared to FY20.

Exports and imports gained share during the just closed fiscal, but the contribution of net exports to GDP remained negative as imports were higher than exports.

Per-capita income rose to Rs 1.72 lakh at current prices in FY22. This is marginally higher than Rs 1.50 lakh before the pandemic.