April 18, 2026

GDP: Growth Is Uneven And Private Consumption Remains Subdued

By Our Editorial Team
First publised on 2022-06-01 08:47:56

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Q4 in FY22 was bad for the Indian economy but given the Omicron wave and global geopolitical situation, it was expected although the RBI had said Q4 growth will be 6%. The NSO has come out with the latest figures which show that the GDP grew at just 4.1% in the last quarter of the last financial year. Hence, the Indian GDP grew by 8.7% for the full financial year in 2021-22, lower than the 8.9% that was expected in February. The figures show that both private consumption and investment have remained subdued and are below the pre-pandemic level in per capita terms.

The figures also show that there was too much unevenness in the recovery process, on the whole and also within most sectors. Agriculture grew by 4.1 percent in Q4 but the loss of wheat and other rabi crop in March will reflect in the next quarter. Manufacturing contracted by 0.2% on the whole though some sectors did post growth. The same story repeated in the services sector with trade, hotels, transport, and communication services registering a slower growth of 5.3% in Q4 (6.3% in Q3) while financial, real estate and professional services continued to grow well.

Although most economic indicators show that growth is on track (even at 8.7% growth in FY22, India was the fastest growing major economy in the world) the continuing war in Ukraine which has disrupted supply chains, the rising world-wide inflation and high commodity prices will keep private consumption and investment subdued. The government has been supporting the economy well without unduly stretching the fiscal deficit as it has been helped by buoyant tax collections and increase in real GDP due to inflation. It will need to do so with greater resolve as the RBI is likely to raise interest rates and squeeze out liquidity from the system to fight growing inflation.  Vigorous fiscal support is needed now to push growth.