India Likely To Maintain Growth Leadership, Anand Rathi

India's GDP growth slowed down to 4.1% in Q4 FY22 but growth for FY22 accelerated to 8.7%. Investment has been the main driver and net exports the main drag during the year as well as the quarter. "Despite improvement during the year, industrial growth lagged services growth during the latest quarter," broking firm, Anand Rathi has said in a report. Here are excerpts from the Anand Rathi report.

Modestly behind expectation

India's GDP growth during Q4 FY22 at 4.1% and FY22 at 8.7% were slightly behind our expectations.

Investment-led growth

Investment has been the main driver of India's GDP growth during both the latest quarter and the last financial year. In contrast, consumption - both private and government - trailed investment.

Role reversal between industry and services

For the full year, industry has grown faster than services while for the latest quarter services has grown faster than industry. The speedier recovery of industrial activities and demand coupled with protected recovery of high-touch services led to this.

Net exports drag down growth

Faster import vs. export growth trimmed India's GDP growth by an additional 200bps over the usual. Containment of government consumption also depressed growth.

India likely to maintain growth leadership

From 8.7% growth in FY22, we expect the rate to come down to 7.5% in FY23 due to factors such as monetary and fiscal tightening, higher interest rates, supply disruption and global slowdowns. Yet, as in FY22, India is likely to remain the fastest growing major economy in FY23 as well.