India's GDP grows 8.7% in FY22; Q4 growth at 4.1%
As per the data released by the Centre, India's gross domestic product (GDP) for the January-March 2022 quarter stood at 4.1%. In the previous quarter, the GDP grew at 5.4%. For Q1, the growth was revised to 20.3%, and for Q2 it was revised to 8.5%. The nation's economy expanded by 8.7% for the complete financial year 2021-22.
Why does this story matter?
From the ongoing COVID-19 pandemic to the Russia-Ukraine crisis, there are several factors that are exerting pressure on the Indian economy and hampering its growth. Despite such problems, the nation's economy is growing at a steady pace and also beating the lowered estimates. One can only hope that the biggest economy in South Asia can take the problems in its stride.
The GDP contracted by 6.6% in 2020-2021
In 2020-2021, India's GDP contracted by 6.6% due to the lockdowns imposed to contain the spread of COVID-19. The nation's economy is now witnessing a significant improvement as compared to before. To recall, India went into a countrywide lockdown from March 25, 2020, to curb the spread of the virus. This severely hampered the economic growth in fiscal 2020-21.
The economy contracted for the first time in four decades
After two successive quarters of negative growth, the nation's economy had contracted by 6.6%- a thing that was seen for the first time in the past 40 years. This was due to a technical recession. The government had released revised estimates of the GDP in February. As per its projections, the economy was slated to grow by 8.9% in FY22.
Retail inflation is now at an 8-year high
In April, there was an eight-year high spike in retail inflation (7.8%), which has cast a dark shadow on the economy's near-term prospects. Meanwhile, the ongoing Russia-Ukraine crisis is causing a surge in commodity and energy prices; which is a significant drag on economic activity. Also earlier this month, the Reserve Bank of India (RBI) raised the benchmark repo rate by 40 basis points.
