GDP growth explained: Indian economy grew but cloud of uncertainty looms

The Indian economy grew but economists are worried about price rises and elevated levels of international oil prices.

The Indian economy has grown, braving the covid pandemic and the ongoing Russia-Ukraine conflict that led to global inflation. However, the road ahead will not be a rosy one for the government as the cloud of price rises is looming large. The economic growth of India slowed to the lowest in the financial year 2021-22 during the January to March period or the fourth quarter. This pulled down the gross domestic product (GDP) growth in the full fiscal 2021-22 to 8.7 per cent, according to the data released by the National Statistical Office (NSO).

The GDP growth for quarter 1 of FY2021-22 (April-June) was at 20.3 per cent, for quarter 2 (July-September) at 8.5 per cent, for quarter 3 (October-December) at 5.4 per cent, and quarter 4 (January to March this year) at 4.1 per cent.

For the full year (April 2021 to March 2022), the country's economic growth of 8.7 per cent was lower than the 8.9 per cent the government had projected three months back. First, the Covid-induced curbs and then the war in Ukraine added to higher commodity prices and a supply squeeze.

The economy contracted by 6.6 per cent in the financial year 2020-21.

Economists said the outlook for the current fiscal year (FY2022-23) remains clouded as global crude oil prices have hardened back to $120 per barrel after increased sanctions on Russian oil.

The economy's near-term prospects have been affected by a spike in retail inflation, which hit an eight-year high of 7.8 per cent in April. The surge in energy and commodity prices caused partly by the Ukraine crisis is also squeezing economic activity.

According to Rumki Majumdar, Economist, Deloitte India, the difference between the real and nominal GDP suggests that inflation has been a persistent problem, and the economy has been fighting the challenge of rising prices for a long time now, PTI reported.