As per the latest data released by the National Statistical Office (NSO), the Indian economy grew at 5.4 percent in the third quarter of 2021-22, well below the expectations of 6.2 percent. For the full year, the economy is now expected to grow at 8.9 percent, lower than the NSO’s earlier estimate of 9.2 percent. This latest figure is a big setback. After suffering for more than two years due to the Covid pandemic, the Indian economy was expected to do much better. It seems the fundamental of the economy is still weak. The pace of economic recovery appears to have lost momentum in the third quarter of the current financial year. Added to this are the fresh worries over the possible impact of the Russian war on Ukraine.
The growth figure as per the latest data is considerably lower than the Reserve Bank of India’s estimate, which in the December monetary policy committee meeting had retained its projection for the full year at 9.5 percent, while projecting growth at 6.6 percent in the third quarter and 6 percent in the fourth quarter. This implies that the pace of recovery has moderated considerably. Moreover, the country is likely to feel the ripple effects of widening sanctions against Russia. With geopolitical tensions escalating, the fragile recovery process could get dented. As oil prices surge, which would be inflationary, it will put pressure on India’s import bill, fiscal deficit, and current account deficit, besides adding to input costs for businesses. Nearly 80 percent of the country’s oil needs are met through imports. The continued impact of Covid and the Ukraine-Russia war is further expected to hurt the Indian economy in the coming days. The government has massive tasks ahead of it.