Printing in just 4 % Gross Domestic Product (GDP) growth for the fourth quarter, a rating agency report has said the final growth numbers for the full year will be lower than the second advance estimate of 7 %.

The economy grew at 13.2 % in the first quarter and 6.3 % in the second three-month period due to base effect and much lower than the consensus expectation of 4.4 % in the third quarter. To close the full fiscal with a 7 % growth, the GDP should deliver at least a 4.1 % uptick.

India Ratings analyst Paras Jasrai in a report said the agency expects GDP to print in at around 4 % in Q4, which would mean GDP growth for FY23 could be lower than 7 % but did not quantify the same. The National Statistical Office, in its second advanced estimate, has retained GDP growth at 7 % for the full year, which factors in a growth of 5.1 %.

However, the agency sees many downside risks to this estimate, such as the pent-up demand, which had provided thrust to growth, is normalising; exports that had been buoyant are facing headwinds from the global slowdown and credit growth is facing tighter financial conditions

Besides, the Metrological department has warned of the plausibility of high  heatwaves during March-May. This can not only affect agricultural output, which has been pegged to grow at 4.3% in Q4, but also keep inflation at elevated levels that can impact rural demand, which has been under stress since the pandemic, Jasrai explained. The growth moderated to a three-quarter low of 4.4% in Q3 as against the consensus projection of 5.1%, pulled down by the poor show by manufacturing and exports, among others. The GVA, which is the value of production, grew 4.6% in Q3. The difference between GVA and GDP is indirect taxes net of subsidies.

Though typically GDP growth is higher than GVA growth, the net taxes in Q3 were at a seven-quarter low of 1.4% due to higher subsidies, and as a result, GVA growth in Q3 was higher than GDP growth.

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