India GDP: Advance Estimates Peg FY23 Growth At 7%
The Indian economy is expected to show resilience in the ongoing fiscal, led by a recovery in services.
The Indian economy will show resilient growth in the current fiscal as activity rebounds despite rising global headwinds.
The gross domestic product is estimated to grow 7% in FY23, according to the first advance estimates released by the Central Statistics Office ahead of the Union Budget. This is compared to a provisional estimate of 8.7% for FY22.
A Bloomberg poll of 27 economists estimated the country's GDP to rise 6.8% in FY23. GDP growth for 2022-23 is projected at 6.8% by the Reserve Bank of India, with Q3 at 4.4% and Q4 at 4.2%.
Gross value added, which strips out indirect tax and subsidies, is expected to rise 6.7% in comparison to a growth of 8.1% in the previous fiscal.
Nominal GDP, which will be used as the base for the upcoming budget, is estimated to rise by 15.4%, compared to a rise of 19.5% in FY22.
The first advance estimates for real GDP and GVA growth are broadly in line with expectations, with the NSO building in a GDP growth of 4.5% for H2 FY23, said Aditi Nayar, chief economist at ICRA.
"Given the full year projections released today by the NSO, we expect there to be some revisions in either the H1 or the H2 FY23 sectoral numbers, in the subsequent data releases," Nayar said.
According to Sunil Sinha, principal economist at India Ratings, the growth momentum witnessed in FY23 despite global headwinds is indicative of Indian economy’s resilience. But the road ahead is not going to be easy so long as private final consumption expenditure does not recover fully and become broad-based.
Nevertheless, on the whole, the first advanced estimate of FY23 GDP will cheer the government since the nominal GDP and, in turn, tax revenues are going to be much higher than budgeted and would provide adequate fiscal headroom to achieve the fiscal deficit target, Sinha said.
GDP Estimates: Key Sectoral Trends
Agriculture sector is estimated to grow by 3.5% in FY23 as compared to 3% in FY22.
The mining sector growth is likely to grow by 2.4% after growing by 11.5% in the previous fiscal.
Manufacturing sector growth is estimated at 1.6% after growing by 9.9% in the previous fiscal.
Electricity, gas, water supply and other utility services are estimated to grow 9% against a growth of 7.5% in FY22.
Construction is set to rise 9.1% as compared to a growth of 11.5% in the preceding fiscal.
Trade, hotel, transport, and communication is estimated to rise by 13.7% in comparison to a growth of 11.1% last fiscal.
The financial services, real estate and professional services sector is likely to grow by 6.4% compared to a growth of 4.2% in the previous financial year.
The public administration segment, supported by government spending, is seen at 7.9% as compared to a growth of 12.6% in FY22.
Expenditure Trends
Private final consumption expenditure, reflecting consumer spending, is seen rising by 7.7% in FY23 as compared to 7.9% in FY22.
Growth in government final consumption expenditure is pegged at 3.1%, compared to a growth of 2.6% last fiscal.
Gross fixed capital formation, which reflects private investment, is estimated to rise by 11.5% after it grew by 15.8% in the previous fiscal.
