7 pc real GDP growth estimate for 2022-23 is realistic: Chief Economic Advisor

By Shailesh Yadav
New Delhi [India], February 28 : Chief Economic Advisor V Anantha Nageswaran said that the ministry of statistics and programme implementation has maintained the real GDP growth forecast for the current financial year at 7 per cent.
"Third quarter at 4.4 per cent year-on-year is also because of the revisions made to the previous years when the base has gone up in constant prices terms, but overall, the growth rate that we need to achieve in the fourth quarter is roughly of the order of only about 4 to 4.1 per cent," the CEA said, adding "The trends that we have in terms of high-frequency data for 2022-23 indicate that achieving that growth rate in Quarter 4 is well within the realm of possibility and therefore the 7 per cent real GDP growth estimate for 2022-23 is very realistic."
In a virtual briefing on the GDP numbers, CEA said, "We maintain as we have mentioned in the economic survey, the growth forecasts are 6.5 per cent for 2023-24. If you look at where we are, in terms of the advanced estimates, manufacturing on the face of it appears to have slowed down in real terms because of the rising input costs etc."
CEA said, "But again, if you look at the PMI indicators, purchasing managers indices, the manufacturing sector is in good health and the performance of the eight core industries in the month of January also tells us that we do have a fairly robust manufacturing growth rate in the fourth quarter, because the combined index of eight core industries increased by 7.8 per cent in January, highest in the last four months, compared to a 7 per cent change in December compared to a 4 per cent change in January 2022.
CEA said have a look at the high-frequency indicators which show continued growth momentum as well. "If you look at the data we have for the first 10 months of the year, we are around USD 370 billion in merchandise exports for the first 10 months and that is showing a growth rate of about 7-8 per cent compared to the previous financial year."
"Services are running at USD 272 billion. So, if you look at the overall trend for the current financial year, exports of goods and services combined might be closer to USD 750 billion compared to USD 680 billion in the previous financial year, which again in the light of the sharp global growth slowdown in 2022-23 is a very critical achievement as well," Anantha Nageswaran said.
CEA said inflation is softening.
"We know that there has been some slight uptick in the inflation data for January and RBI also has maintained its forecast that inflation will come down gradually and we do have some uncertainties related to monsoon because of the El Nino activity, etc," CEA said, adding, "So it is something where we need to be ready with both supply side and monetary policy measures in the course of the next financial year."
CEA said in terms of high-frequency data, demand is picking up. "If you look at the April to March numbers 2021-22 in terms of two wheelers 179 lakh units in 2021-22 has already close to being surpassed with 10 months of data in 2022-23 166 lakh units of two-wheelers sale."
"Sale of tractors indeed is attaining new levels, multiple indicators, passenger vehicles, housing launches and sale, aircraft passengers handled and commercial vehicle sales, all of them are moving in the right direction," CEA said. "What is heartening is that the real estate sector which also had a fairly tepid decade in 2011 to 2020 is now bouncing back strongly in terms of number of lakhs of units of launches and sales in the calendar year 2022."
CEA said that as per the Ministry of Statistics data, the unemployment rate is coming down and the worker-population ratio is picking up. "Employees' Provident Fund Organisation (EPFO) data shows that jobs are being created at lower salary levels. eShram portal registration has reached 28.6 crore."
"Corporate tax collection and direct tax collections during April to January is much higher than the previous years' both personal income tax as well as corporate taxes. GST collections for April to January average is running well above the average of 1.2 lakh crore now. We're at about 1.5 lakh crore gross average," he said.
CEA said that all these indicators showed buoyant economic activity. "GDP forecast of almost 6.5 per cent is well within the forecasts of 5.7 per cent of OECD to 7.2 per cent of Asian Development Bank (ADB)."
CEA said, "Downside risks to 2023-24 still do prevail and dominate the upside potential to 6.5 per cent. We don't know how oil prices and food and other fertiliser prices will behave in 2023-24 depending on disruptions caused by geopolitical conflicts caused by weather-related events."
CEA said that there is upside potential as well, like limited impact on crude oil, in the second half of the new financial year. "Monetary policy may come to a halt in terms of tightening in the developed world and may even reverse in the second half of financial year leading to improvement in capital inflows, which in turn might lead to lower crude oil prices and food inflation become contained," he said.