Covid-related restrictions, global supply shortages and higher input costs due to uncertainties triggered by Russia’s invasion of Ukraines further slowed India’s economic growth in the fourth quarter of the 2021-22 fiscal (April-March) with full-year gross domestic product (GDP) growth hitting 8.7% after contracting by 6.6% in the previous financial year, government data showed.
The GDP grew by 4.1% in January-March 2022, data released o Tuesday by the Statistics Ministry showed. GDP growth slowed to 5.4% in the third quarter from 8.55% in the second quarter and 20.3% in the first quarter of the financial year.
India, Asia’s third-biggest economy, had just started to recover from the impact of Covid-19 closures when a sudden increase in cases earlier this year forced the government to impose new restrictions. The war in Ukraine then pushed up food and fuel prices, pushing inflation rate higher than anticipated and eventually forcing the central bank to raise interest rates.
The Reserve Bank of India is expected to further raise the rates next month after its scheduled policy meeting.
Data for the January-March quarter showed that the agriculture sector grew 4.1%, while the manufacturing segment contracted 0.2%. The gross value added (GVA) during the fourth quarter stood at 3.9%, while that for the full financial year was at 8.1%.
MOneycontrol.com said that economists have revised down India’s growth forecast for 2022 as rising energy and food prices have hit consumer spending – which accounts for 55% of the economy – while most companies increasingly pass on rising input costs to consumers.
“The rise in crude oil, food and fertiliser prices will weigh on household finances and spending in the months ahead,” Moody’s, the rating agency, said in a note. It has reduced India’s economic growth forecast to 8.8% from 9.1% for the 2022 calendar year. Some other ratings agencies have done so too.