FY 2021-22 GDP Largely In Line With Estimates

The FY 2021-22 GDP and the GDP for the fourth quarter of 2021-22 were largely in line with estimates. The numbers from the manufacturing sector were encouraging, as it grew by 9.9% against a contraction of 0.6%. Manufacturing in the fourth quarter collapsed in the negative territory and contracted by 0.2%, thereby, pulling the overall GDP growth down. Construction showed a growth of 11.5% versus a contraction 7.3%.

Nish Bhatt, Founder & CEO, Millwood Kane International on GDP data said," The Q4 & FY22 growth rate has been better than most estimates. GDP for FY22 rose 8.7% vs a contraction of 6.6% YoY, this was the highest growth rate in the previous five years. The Jan-March quarter GDP grew by 4.1% vs 2.5% YoY, however, on a QoQ basis, it was a dip. The agriculture output growth slowed down YoY, and manufacturing saw an uptick. Most growth was largely on account of a lower base.

FY22 saw multiple disruptions like Omnicron, geo-political tensions, a spike in crude prices, and elevated input costs. The heatwave in Q1FY23 may prove to be a dampener but a normal monsoon will be positive that may help improve agriculture output. We believe most disruption is behind us, COVID and geo-political-related tensions have subsided. Spike in crude prices and raw materials is the most significant risk to growth going forward".

According to Sujan Hajra, Chief Economist and Executive Director, Anand Rathi Shares & Stock Brokers, The Q4 FY22 at 4.1% and FY22 GDP growth at 8.7% came marginally lower than their expectations.

"Moreover, the growth comes against the negative base of the pandemic year. Yet, there are several positive indicators as well. The rebound in capex in FY22 is the biggest positive. Even private consumption shows signs of improvement. But for large trade deficit and subdued increase in government consumption, GDP growth could be in double digits in FY22 and close to 8% in Q4 FY22.

Despite the ongoing geopolitical uncertainties, supply disruptions, high commodity prices, inflation and monetary tightening, we expect India to continue to be the fastest growing major economy of the world in FY23 as well with 7.5% growth. The broadly in-line growth number, better than expected fiscal number for FY22 and infra growth number for Apr'22 (all released today) would be positive for financial markets," he said.