GDP Grows By 6.7% In April-June vs 7.8% In Jan-March, Lowest In 5 Quarters

India's GDP growth rate slows down to 6.7% in Q1 FY23

India's gross domestic product (GDP) grew by 6.7% in the first quarter (Q1) of the 2023-24 fiscal year (FY23), as per the data released by the National Statistical Office (NSO) on August 31, 2023. This is lower than the 7.8% growth rate recorded in the previous quarter (Q4 FY22) and the lowest in the last five quarters.

Key Highlights

• The slowdown in GDP growth was primarily due to a contraction in the manufacturing sector, which declined by 0.1% in Q1 FY23.
• The services sector, which accounts for over 50% of India's GDP, grew by 8.4% in Q1 FY23, driven by strong growth in the financial, real estate, and professional services sectors.
• The agriculture sector grew by 2.3% in Q1 FY23, supported by a good monsoon season.

Government's Response

The government has expressed concern over the slowdown in GDP growth and has announced a slew of measures to boost economic activity. These measures include:

• Increasing infrastructure spending
• Providing tax incentives to businesses
• Relaxing foreign direct investment (FDI) norms

Conclusion

India's GDP growth rate is expected to moderate in the coming quarters due to global headwinds such as the Russia-Ukraine war and rising inflation. However, the government's measures are likely to provide some support to economic activity and help the country achieve its growth target of 7-8% for FY23.