India’s GDP grew 8.7% in fiscal FY22

New Delhi : India’s gross domestic product during fiscal year 2021-22 is estimated at 8.7 per cent as compared to a contraction of 6.6 per cent in 2020-21, official data showed on Tuesday. The GDP grew 4.1 per cent year on year in Q4FY22, data showed. In the same quarter of FY21, it was 1.6 per cent. The Reserve Bank of India (RBI) had projected GDP for the fiscal that ended in March at 9.5 per cent and for Q4 at 6.1 per cent. Besides, the combined Index of Eight Core Industries stood at 143.2 in April 2022, which is an increase of 8.4 per cent (provisional) as compared to the index of April 2021. The production of coal, electricity, refinery products, fertilisers, cement, and natural gas industries increased in April 2022 over the corresponding period of last year. Prakash Chawla, economic expert, says, Inflation is certainly taking its toll on India’s GDP growth, as is evident from a sharp difference between the trajectory at constant prices (after factoring in inflation) and current prices (without deflating the inflation). In simple words, while real economic growth (after adjusting for inflation) for the fourth quarter of the financial year 2021-22 was just about 4.1 per cent, it was more than three times higher at 15.2 per cent without factoring in inflation. Likewise, the growth rate for the entire fiscal of 2021-22 was 8.7 per cent at constant prices, whereas it shot up by 19.5 per cent. This is all because of inflation which is filling in government coffers, though expenditure pressure is also mounting. High inflation also results in higher taxes for the exchequer. This is also seen in a big rise of 32.8 per cent in net taxes on products at current prices for FY’22. The price rise has crept into the entire supply chain of all the products and services, be it food or manufactured items or activities such as mining. So, inflation remains the number one challenge for the government as also the Reserve Bank of India, which is left with not much of an alternative but to squeeze liquidity from the system and raise interest rates.’