Skip to content
Search AI Powered

Latest Stories

India's growth slows in December quarter

India's growth slows in December quarter

INDIA's economic growth slowed further in the December quarter as pent up demand eased and weakness in the manufacturing sector continued.

Asia's third largest economy recorded year-on-year growth of 4.4 per cent in October-December, down from 6.3 per cent in July-September, data released by the government on Tuesday (28) showed.


The sharp fall in the year-on-year growth rate is also partly due to a fading of pandemic-induced base effects and revision to last year's growth, economists said.

The government retained its growth forecast of seven per cent for 2022-2023 while revising higher growth for the previous year to 9.1 per cent from the earlier 8.7 per cent.

"We are likely to hit the seven per cent GDP growth target for the year," said India's chief economic advisor V Anantha Nageswaran at a press briefing.

Growth of four per cent - 4.1 per cent is possible in the January-March quarter, he said.

Even though a weaker global economy is likely to pull down India's growth to near 6.4 per cent next year, the International Monetary Fund (IMF) and the World Bank project India to be the fastest-growing major economy in 2023.

India's manufacturing sector shrank by 1.1 per cent year-on-year in the third quarter, a second straight contraction reflecting lower profit margins and weaker exports.

External demand was weak as central banks globally continued monetary tightening to tame inflation.

"The major disappointment is negative growth in manufacturing," said Madan Sabnavis, economist at state-run Bank of Baroda. He said 2022-2023 growth will be at 6.8 per cent against a government estimate of seven per cent.

India bounced back strongly from the coronavirus pandemic, but is still grappling with the same headwinds buffeting the global economy.

The country of 1.4 billion people imports more than 80 per cent of its crude oil needs and rising petrol costs since Russia's invasion of Ukraine have had a ripple effect on prices.

The Reserve Bank of India has hiked rates by 2.50 percentage points since May last year in an aggressive response to rising consumer inflation, which hit a three-month high of 6.52 per cent in January.

"Growth indicators have started to show signs of reacceleration in early 2023" after "losing some steam" in late 2022, Morgan Stanley said in a report on Tuesday (28).

"Healthy household balance sheets and a pickup in private and public capex (capital expenditure) will sustain gains in employment - which will allow consumption growth to stay strong in the coming quarters," it added.

Government spending declined 0.8 per cent year-on-year in the December quarter compared to revised 4.1 per cent contraction in the previous quarter.

"There is a significant deceleration in consumption growth - both for the private and government sectors," said Rupa Rege Nitsure, economist at L&T Financial Holdings.

"A possibility of additional interest rate hikes coupled with a slowdown in overall demand pose a further downside risk to manufacturing activity."

Acknowledging the risks from global and local inflation, chief economic advisor Nageswaran said policymakers need to be ready with supply-side and monetary policy measures to tackle inflation uncertainties.

"Borrowing costs may stay higher for longer and entrenched inflation may prolong tightening cycle globally," he said.

India's private consumer spending, contributing around 60 per cent of GDP, rose just 2.1 per cent year-on-year in December quarter, compared to downwardly revised 8.8 per cent increase in the previous quarter, while capital investment rose 8.3 per cent year-on-year compared to revised 9.7 per cent growth in the same period.

Private investment activity is recovering, said Nageswaran.

In real terms, India's GDP is estimated at Rs 159.71 trillion ($1.93tn) in the current financial year ending in March, about 9.6 per cent higher compared to pre-Covid level of Rs 145.69tn ($1.76tn) in 2019/20, data showed.

(Reuters)

More For You

Sanjay Bhandari's extradition appeal opens in London
Sanjay Bhandari

Sanjay Bhandari's extradition appeal opens in London

SANJAY BHANDARI, a consultant in the defence sector wanted in India on alleged tax evasion and money-laundering charges, began an appeal in the High Court in London against his extradition order.

The 62-year-old businessman had won permission to appeal against a November 2022 Westminster Magistrates’ Court ruling clearing his extradition earlier this year.

Keep ReadingShow less
Rupert Murdoch looks on as he walks on the day of the hearing on the contentious matter of succession of Rupert Murdoch's global television and publishing empire, in Reno, Nevada, US, September 23, 2024. (Photo: Reuters)
Rupert Murdoch looks on as he walks on the day of the hearing on the contentious matter of succession of Rupert Murdoch's global television and publishing empire, in Reno, Nevada, US, September 23, 2024. (Photo: Reuters)

Murdoch's bid to secure eldest son's control of media empire fails

RUPERT MURDOCH’s attempt to secure control of his media empire for his eldest son, Lachlan, has reportedly failed, according to a US news report on Monday.

The Murdoch family, which oversees influential outlets like Fox News, The Wall Street Journal, and various British and Australian media organisations, has often been compared to the fictional dynasty in the TV series Succession. Like the show, real-life disputes within the Murdoch family have centred on control of the business after Rupert Murdoch’s death.

Keep ReadingShow less
Kamlesh Pattni faces UK sanctions for illicit gold trade
Pattni stands accused of central involvement in the infamous Goldenberg scandal. (Representational image: iStock)

Kamlesh Pattni faces UK sanctions for illicit gold trade

THE UK and US have imposed financial sanctions on Kamlesh Pattni, a British-Kenyan businessman with a controversial financial history. The punitive measures target Pattni and four of his close family members, including his wife and brother-in-law, reported the BBC.

The sanctions, announced by the UK Foreign, Commonwealth and Development Office, will result in the immediate freezing of assets, representing a significant intervention in what officials describe as a complex network of illicit gold trading spanning multiple African nations.

Keep ReadingShow less
Sanjay Malhotra speaks during the 67th Foundation Day of the Directorate of Revenue Intelligence (DRI) in New Delhi on December 4, 2024. (Photo: Getty Images)
Sanjay Malhotra speaks during the 67th Foundation Day of the Directorate of Revenue Intelligence (DRI) in New Delhi on December 4, 2024. (Photo: Getty Images)

India appoints Sanjay Malhotra as new central bank governor

INDIA has appointed Sanjay Malhotra, a senior finance ministry bureaucrat, as the new governor of its central bank, the Reserve Bank of India (RBI).

The announcement was made on Monday, a day before the term of outgoing governor Shaktikanta Das was set to expire.

Keep ReadingShow less
The new order includes 10 widebody A350 planes and 90 narrowbody A320 family aircraft.
The new order includes 10 widebody A350 planes and 90 narrowbody A320 family aircraft.

Air India orders 100 more Airbus jets to expand fleet

AIR INDIA has placed an order for 100 more Airbus aircraft to expand its fleet and enhance connectivity, the Tata Group-owned carrier announced on Monday.

The new order includes 10 widebody A350 planes and 90 narrowbody A320 family aircraft. The purchase is in addition to the 470 aircraft Air India ordered last year from Airbus and Boeing, the airline said in a statement.

Keep ReadingShow less