Thursday, 11 Sep, 2025
By: Sutanu Guru
As the latest figures of GDP growth rate for the April-June 2022 quarter show (13.5%), the roller coaster ride seems to continue. During the January-March quarter, GDP growth rate had slumped to 4.1%, the lowest quarterly growth rate for the financial year 2021-22.
When it comes to quarterly GDP numbers for the Indian economy, it has been a roller coaster ride of sorts with wild swings and fluctuations since the Covid pandemic hit India and the world. As the latest figures of GDP growth rate for the April-June 2022 quarter show (13.5%), the roller coaster ride seems to continue. During the January-March quarter, GDP growth rate had slumped to 4.1%, the lowest quarterly growth rate for the financial year 2021-22. This had raised concerns among economists, analysts as well as policy makers that the Indian economy will fail to sustain the growth momentum it had gathered. With the Russian invasion of Ukraine completely disrupting global oil and commodity markets, these concerns were further heightened. To it all, the month of April saw retail inflation at about 7.8% forcing the Reserve Bank of India to raise interest rates by 140 basis points. This prompted many economists to conclude that investment sentiments would be dampened. Consumer sentiments have anyway been extremely weak since April, 2020.
But the latest numbers show that despite the wild fluctuations, the Indian economy is resilient and barring even more exogenous shocks, a 7% forecast for the full financial year 2022-23 is quite realistic. The huge spike in global oil prices has not adversely affected the economy as badly as initially anticipated because India has upped imports from Russia by massive amounts and at prices that are more attractive. In addition, India doesn’t need to pay Russia in dollars. Then again, the massive spike in global food prices hasn’t affected India because it is a net exporter of food rains and entirely self sufficient in major staples like rice and wheat. Perhaps the only dark cloud on the horizon is the erratic behaviour of the monsoon this year. Some states and regions have been inundated with rains and floods while some others have suffered a 40% shortfall in monsoon rains. There is no doubt anymore that the Kharif harvest this year will be much lower than the 115 million tons recorded last year. Some estimates suggest the harvest could drop to 100 million tons. This would definitely have an adverse impact on GDP figures for July-September this year.
But overall, the Indian economy seems to be in good shape. More importantly, benefits of higher GDP growth rate are finally reaching ordinary Indians, something that was not seen when the economy grew at 8.7% in 2021-22. While the media focuses more on the array of passenger cars and SUVs launched by various companies, aspirational middle class India realises its dreams by buying two wheelers. In 2020-21, despite the brutal lockdown and a contraction in GDP, two wheelers sales clocked 15.16 million units. The next year, even as GDP grew at 8.7%, two wheeler sales fell to 13.46 million units. During the same period, car & SUV sales increased at double digit rates to more than 3 million units. Clearly, it is high income, rather than ordinary Indians that were enjoying the benefits of high GDP growth rates. But things have changed as revealed by latest data. During the April-June 2022 quarter, scooter sales doubled and motorcycle sales increased by 38%. This time around, GDP growth rate does appear to be more broad based. And the 7% GDP growth rate target does appear realistic.
