Asia’s third-largest economy expanded at a faster pace in the fourth quarter (2022-23) on the back of an uptick in demand, especially in the services sector, easing commodity prices and government spending, analysts said. In the third quarter of FY23, the country’s GDP growth stood at 4.4%.

On February 28, NSO, in its second advance estimate, projected real (or inflation-adjusted) GDP growth at 7% in 2022-23, compared to 9.1% in 2021-22. Based on these numbers and extrapolation of GDP growth over three quarters, it had forecast fourth quarter growth to be 5.1%.

Last week, Reserve Bank of India (RBI) Governor Shaktikanta Das said the economic growth number for 2022-23 may hold a “positive surprise”. “All the high-frequency indicators maintained their momentum in the fourth quarter. Therefore, we should not be surprised if the growth is slightly more than 7 per cent for FY23,” Das said at an event on May 24.

In the January-March quarter, India’s manufacturing sector output rose 4.5% from a year ago, compared to 1.1% contraction in the previous quarter. Farm output rose 5.5% compared to 3.7% growth in the same period.

For the full year, agriculture is estimated to have grown 4% in 2022-23 compared with 3.5% last fiscal. Mining is estimated to have expanded by 4.6% compared with 7.1%. However, manufacturing growth is likely to have grown at 1.3% against an 11.1% increase in the previous fiscal.

India is poised to sustain its growth momentum in the current fiscal year (2023-24), aided by easing price pressures, although a slowdown in other economies could pose risks, RBI said in its annual report on Tuesday.

“Slowing global growth, protracted geopolitical tensions and a possible upsurge in financial market volatility” could pose downside risks to the economic growth, the central bank warned in its report.

For 2023-24, the RBI stuck to its real GDP growth forecast of 6.5% for 2022-23, with risks evenly balanced. “Domestic economic activity does face challenges from an uninspiring global outlook, going forward, but resilient domestic macroeconomy and financial conditions, expected dividends from past reforms and new growth opportunities from global geo-economic shifts place India at an advantageous position,” RBI said in its report.

In the October-December quarter 2022, India’s economy grew 4.4%, slower than the previous three-month period of 6.3%, pointing to the impact of global headwinds and lower consumption.