The loss of momentum in GDP growth in the third quarter was mainly due to the waning of the favourable base effect
New Delhi: India's economic growth slowed to 5.4 per cent in the omicron-hit October-December 2021 quarter from 8.5 per cent in the previous quarter, but was higher than the 0.7 per cent gross domestic product (GDP) expansion in the year-ago quarter, the data released by the Ministry of Statistics and Programme Implementation showed on Monday. The government also pegged down the full-year growth estimate to 8.9 per cent from its January estimate of 9.2 per cent in view of rising risks from higher prices of crude oil and commodities following Russia's invasion of Ukraine.
The loss of momentum in GDP growth in the third quarter was mainly due to the waning of the favourable base effect.
Growth in consumer spending slowed to 7 per cent from 10.2 per cent quarter-on-quarter and manufacturing growth slowed to 0.2 per cent from 5.6 per cent. The construction sector contracted 2.8 per cent from 8.2 per cent.
In a separate data, the Controller General of Accounts also showed that the Centre's fiscal deficit rose to 58.9 per cent of the FY22 target during April 2021-January 2022. In April-December 2021, the fiscal deficit had amounted to 50.4 per cent of the full-year target. However, the latest numbers on the government's finances come after the 2022 Budget said the Centre would exceed its fiscal deficit target of 6.8 per cent of the GDP by 10 basis points.
As per the ministry's data, the GDP at constant (2011-12) prices in Q3 of 2021-22 is estimated at Rs 38.22 lakh crore against Rs 36.26 lakh crore in Q3 of 2020-21, showing a growth of 5.4 per cent. However, it suggested that the nominal GDP or GDP at current prices in the year 2021-22 is estimated to attain a level of Rs 236.44 lakh crore against Rs 198 lakh crore in 2020-21, showing a growth rate of 19.4 per cent.
Several economists had projected about 6 per cent year-on-year growth during the three months to end-December 2021, slower than the previous two quarters, with rising fears over geopolitical tensions. Even the RBI, in its latest monetary policy, pegged the country's GDP growth rate for this fiscal at 9.2 per cent, and 7.8 per cent for the following year. RBI governor Shaktikanta Das said there was some loss of economic momentum due to the third Covid wave.