“During the fourth quarter, with the exception of manufacturing, all other sectors showed positive growth. Manufacturing declined by 0.2%, indicating the slight impact of the Omicron variant-induced lockdowns. also posted a timid growth of 2.0%.Sequential seasonally adjusted GDP growth is lower than -seasonally adjusted GDP growth for the fourth quarter compared to the past. quarter, real GDP growth is 6.7% quarter-on-quarter, but seasonally adjusted real GDP growth is only 0.71%, showing only modest improvement from last quarter and loss of growth momentum,” according to SBI Ecowrap.
India’s growth slowed in Q4FY22 by 3.9%, compared to an increase of 4.7% in Q3FY22. The slowdown was driven by moderation in services activity, including trade and transport, due to pandemic-induced restrictions. The contraction in manufacturing activity (-0.2% vs. 3.7% in Q3) added to the pain, as the conflict between Russia and Ukraine (from February) led to a global shortage of l supply and pushed global commodity prices to an all-time high. Additionally, the mining sector slowed by 6.7% (9.2% in Q3FY22). Moreover, a significant moderation was observed for public administration and defense activity (7.7% against 16.7% in T3FY22). Agriculture remained the only bright spot with growth of 4.1% in Q4 versus 2.5% in Q3FY22.
Due to the pandemic, there was a loss of Rs 9.57 lakh crore in FY21, compared to FY20. However, there was an increase in GDP of Rs 11.77 lakh crore in FY22. With this, GDP exceeded by Rs 2.19 lakh crore in FY22, from FY20 level and RS 7.4 lakh crore from FY19 level. If FY22 GDP is compared to FY20 – before the pandemic hit the economy – it is 1.5% higher.
Rebirth of hospitality
“Trade, hospitality, transport, communication and broadcasting-related services” is the only sector still 10.3% below pre-pandemic (i.e. FY20) level. That’s still Rs 3.04 lakh crore lower than fiscal 2020 levels.
We believe that by the first quarter of FY23, this sector will reach / cross the pre-pandemic level. On the expenditure side, private and government final consumption expenditure exceeded the pre-pandemic level by Rs 1.2 lakh crore and 0.93 lakh crore, respectively. On the expenditure side, while private final consumption expenditure increased by 7.9% in FY22 compared to the contraction in FY21, government final consumption expenditure slowed to 2.6% during FY22, because
vs. 3.6% growth in FY21. Gross fixed capital formation increased by 15.8% in FY22. Valuables and exports posted double-digit growth.
The gap between nominal GDP growth and real GDP growth widened between the second quarter of FY20 and
Q1 FY22 due to higher inflation. It moderated in the second and third quarters of FY22, but increased slightly in the last quarter of FY22.
Credit growth is promising
Provisional ASCB data for the fortnight ending 6 May 22 indicates that growth of Rs 1.5 lakh crore in credit and growth of Rs 2.30 lakh crore in deposit growth occurred during the exercise in progress. Interestingly, this is the first time in the last five years that in the first three fortnights credit growth has remained positive, which generally remains negative in the first fortnights.
Sectoral data for April indicates that the credit drawdown occurred in almost all sectors. The personal loans segment continued to perform well, recording an acceleration in growth to 14.7% in April 2022 and contributes around 90% of the additional credit during the month, mainly driven by the “housing”, “loans cars” and “Other personal loans”.