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Business News›News›Newsblogs›India GDP Growth News LIVE Updates: India's Q4 GDP growth seen at one-year low on weak consumption
LIVE BLOG
Economic Times | 31 May, 2022 | 11:08AM IST
India GDP Growth News LIVE Updates: India's Q4 GDP growth seen at one-year low on weak consumption
India GDP Live Updates: Soaring prices and the subsequent hit to consumer spending and investments are likely to further dampen India's economy, as the central bank faces a finely balanced struggle to tame inflation via rate hikes without hurting economic growth, economists said. Forecasts for the GDP data, ranged from 2.8% to 5.5% in the May 23-26 survey of 46 economists by Reuters. The economy's near-term prospects have been darkened by a spike in retail inflation, which hit an eight-year high of 7.8% in April. The surge in energy and commodity prices following the Ukraine crisis is also exerting a drag on economic activity. High-frequency indicators showed supply shortages and higher input prices were weighing on output in the mining, construction and manufacturing sector, even as credit growth has picked up and states are spending more. Indian consumer sentiment slid in early May, dipping for the second month in a row, as rising fuel prices and broader inflation hit household finances.
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Govt in firefighting mode
The rupee's nearly 4% depreciation against the dollar this year has also made imported items costlier, prompting the federal government to restrict wheat and sugar exports and cut fuel taxes, joining the RBI in the battle against inflation.
Another dampener
Unemployment rose to 7.83% in April from 7.57% in March, according to the Centre for Monitoring Indian Economy.
Reuters poll
Asia's third-largest economy probably grew 4.0% in the January-March quarter from a year earlier, a Reuters poll showed last week. That would be the slowest pace in a year, following 5.4% growth in the previous quarter. Forecasts for the data, due at 1200 GMT on Tuesday, ranged from 2.8% to 5.5% in the May 23-26 survey of 46 economists.
India's growth story in trouble?
As soaring fuel and edible oil prices continue to push inflation to an unbearable level for the common man in India, economies across the world are also reeling under pressure due to current geo-political tensions caused by Russia-Ukraine conflict. All these factors may dent India’s growth story too - in a big way. Today's GDP numbers would give us some idea, where the economy is heading.
Higher input costs and supply side pressures could slow down the growth rate. We forecast India's economic growth slowed to 3.7% year-on-year.
- Rahul Bajoria, chief economist, Barclays India
Macro cues: Factory output growth picked up, rising 1.9% in March from 1.5% in the previous month, aided by electricity and mining. The output growth of eight infrastructure industries slowed to 4.3% from 6% in February as coal and crude oil output fell from a year ago.
Other indicators of consumer activity were encouraging though, with bank credit growing 11.1% toward the end of last month from 9.6% in end-March. Liquidity conditions continued to remain in surplus.
Exports grew at this year’s fastest pace, rising 30.7% in April from a year ago to $40.2 billion, although in value terms that was lower than the $42.2 billion seen a month prior.
Needle on the dial measuring so-called ‘Animal Spirits’ remains steady at 5 for the 10th straight month
We believe the GDP projection for Q4FY22 is clouded by significant uncertainties. For example, even a 1 per cent downward revision in Q1 GDP estimates of FY22 from 20.3 per cent, all other things remaining unchanged could push Q4 GDP growth to 3.8 per cent,
- SBI Ecowrap report
Agricultural growth is expected to have slipped to 2.5% in the January-March 2022 quarter, from 2.6% in the previous quarter
The currency has seen a series of record lows in recent weeks amid investment outflows of more than $20 billion this year
Growth projections
Monsoon relief: The monsoon arrived earlier than normal in India, raising hopes that output of crops like rice and oilseeds will get a boost after a brutal heat wave hit winter-sown wheat and prompted the nation to restrict exports.
Brent crude climbs above $120/bbl as EU leaders agree to ban export of Russian oil to the bloc
Warning signs
India’s consumer price inflation will overshoot the central bank’s target range this year to average around 7.5%, a former member of the monetary policy committee said, with the benchmark repo rate likely to rise as high as 6% by the end of the tightening cycle.
India’s coordinated fiscal and monetary efforts to tame inflation, plus a good agricultural production outlook, may take pressure off the central bank to aggressively raise interest rates later in the year
- Rama Subramaniam Gandhi,former RBI official
Asia’s third largest economy had just begun recovering from the pandemic-induced slump when a surge in Omicron cases in January brought back some of the virus-related restrictions. The war in Ukraine, in February, further added to its woes, pushing up commodity prices and squeezing supplies further.
FY22 GDP growth seen at 8.2-8.5%: SBI Ecowrap report
SBI research report Ecowrap estimated India's FY22 GDP growth to fall between 8.2-8.5% and Q4 growth is projected at 2.7%
Reduction in excise duty on fuel last week
Last week, the government had cut excise duty on petrol by a record Rs 8 per litre and that on diesel by Rs 6 per litre to give relief to consumers battering under high fuel prices that has also pushed inflation to a multi-year high.
Cut in excise duty on fuel
Recent cut in excise duties on petrol and diesel will help boost sentiments and improve consumers' disposable incomes.
Q4 was a challenging quarter: Aditi Nayar
Icra's Chief Economist Aditi Nayar said Q4 was a challenging quarter, with the Omicron-fuelled third wave of Covid-19 arresting the momentum in contact-intensive services, and a pervasive pressure on margins from higher commodity prices.
NSO to release Q4 numbers today
The National Statistical Office (NSO) will release the fourth quarter numbers of fiscal 2022 on May 31
Economic growth in fourth quarter
The economic growth may have slowed to 3.5 per cent in fourth quarter of 2021-22 from 5.4 per cent in the previous three-month period due to the impact of higher commodity prices on margins, decline in wheat yields and on higher base, Icra Ratings said on Monday.
