Subbarao: Q1 GDP growth below expectation, cause for concern

NEW DELHI: India’s GDP growth of 13.5 per cent in the April-June quarter of 2022-23 has turned out be a cause for ‘disappointment and concern’, as there was expectation of a bigger bounce back from the first quarter of last year when economic activity was crippled by the Delta wave of Covid-19, former RBI governor D Subbarao said on Sunday.

Subbarao added that risk factors for the country’s growth outlook in the short term include high commodity prices, possibility of a global recession, monetary tightening by the RBI and an uneven monsoon that could threaten crop output, especially of rice.

“The economy clocked growth of 13.5 per cent in the first quarter (April-June) of this fiscal year which would have been cause for celebration in any other circumstance. “In the event, it’s turned out be a cause for disappointment and even concern,” he said.

India’s economy expanded 13.5 per cent in the April-June quarter, the quickest pace in a year. As per the RBI’s estimates, the country’s GDP is expected to witness a growth of 7.2 per cent in the current financial year.

“Disappointment because there was expectation of a bigger bounce back from the first quarter of last year when economic activity was crippled by the Delta wave,” he said. The GDP growth, though lower than the Reserve Bank of India (RBI) estimate of 16.2 per cent, was fuelled by consumption and signalled a revival of domestic demand, particularly in the services sector.

According to Subbarao, the GDP growth in the first quarter turned out to be a cause of concern because contrary to what the headline numbers indicate, there has in fact been a slowdown in the growth momentum which points to growth decelerating further in the quarters ahead.

Gross domestic product (GDP) growth of 13.5 per cent year-on-year compares to a 20.1 per cent expansion a year back and 4.09 per cent growth in the previous three months to March.

He observed that in order to get to $5 trillion over the next 4-5 years, India should be growing consistently at 8-9 per cent which requires us to be firing on all cylinders, but most of the country’s growth drivers are ebbing.