India’s real gross domestic product (GDP) increased by 4.4% year over year in the third quarter (Q3) of current fiscal year, which was a slower rate of growth than the previous quarter’s 6.3% and the same period last fiscal year’s 5.2%. According to credit rating agency CRISIL, nominal GDP growth was at 11% due to decreased inflation and real GDP growth, which was returning to its long-term pattern.
With private consumption, government consumption expenditures, and imports seeing the largest decline, all demand groups experienced slower growth. According to a press release from CRISIL, on the supply side, growth in the manufacturing and services sectors slowed while it surged in the agriculture, construction, mining, and electricity sectors.
Growth in private final consumption expenditures (PFCE) decreased to 2.1% from 8.8%. % from the prior quarter, indicating weak domestic demand. This is supported by the fact that import growth fell from 25.9% to 10.9%, as observed by CRISIL. While export growth also slowed, to 11.3% from 12.3% in Q3 FY23, it did so to a lesser extent than import growth. When external demand weakened earlier than domestic demand in Q2, exports began to slow down more quickly than imports.
Gross value added (GVA), a measure of production, increased by 4.6% in Q3 FY23 compared to 5.5% the previous quarter. The largest decline in growth was in manufacturing (minus 1.1% vs. minus 3.6%), as a result of a hit from exports and declining local demand.