The State Bank of India on Thursday lowered its forecast for growth in the Indian economy for the current financial year, 2022-’23, to 6.8% from its June estimate of 7.5%. Lower than expected growth in the first quarter was the reason behind the revision, the country’s largest bank said in a report.
On Wednesday, government data showed that India’s gross domestic product grew by 13.5% in the April-June quarter. Earlier this month, the Reserve Bank of India had projected the estimated first quarter GDP growth to be 16.2%.
The State Bank of India report also noted that the first quarter growth rate, despite being in double digits, was “way below market expectations”. The 4% growth rate in the manufacturing sector was the “primary culprit” contributing to the poor numbers, the report said.
The State Bank of India also called for an introspection in the use of the 2012 index to calculate industrial production and consumer inflation. The index was now outdated, State Bank of India Group’s Chief Economic Advisor Soumya Kanti Ghosh wrote on Twitter.
“The growth in manufacturing sector remains a statistical puzzle and is underestimated,” Ghosh wrote. The report added that the use of the 2012 index often overstates consumer inflation, which is an indicator of price rise in the retail markets.
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