What constitutes the news?

The most recent agency to reduce its projection for the FY23 GDP is India Ratings. Since the announcement of the April-June quarter GDP statistics, other organizations have also revised their projections to below 7%, as well as the rating agency has performed the same, reducing its projection from 7% to 6.9%.

About the Ratings?

India Ratings indicated in a statement that "the agency expects the slowdown in the growth of government final consumption expenditure (GFCE) and worsening of net exports to take into account on the FY23 GDP growth" irrespective of the fact that private final consumption expenditure (PFCE) and gross fixed capital formation (GFCF) growth appears to have come in better than our assumptions in the first quarter (Q1).

Defining the concept of GFCE and GFCF


An overall transaction amount on a nation's national income accounts is described as "government final consumption expenditure" (GFCE) signifies government spending on products and services that are utilized to effectively fulfill personal requirements (individual consumption) or group needs of community members (collective consumption).

It contains the value of the commodities and services generated by the government itself, eliminating own-account capital creation and sales, in addition to the government's spending on goods and services developed by market producers that are distributed to households - without any modification - as transfer payments in kind.


The United Nations System of National Accounts (UNSNA), the National Income and Product Accounts (NIPA), and the European System of Accounts all utilize the macroeconomic notion of gross fixed capital formation (GFCF) (ESA). Standard metrics for it were implemented in the 1950s, but the idea dates back to Simon Kuznets' capital formation work at the National Bureau of Economic Research (NBER) in the 1930s.

In accordance with the figures, it determines the total number of fixed asset purchases that were made by the business sector, governments, and "pure" families (apart from those that do not have incorporated businesses), less fixed asset sales. Since the GFCF is a subset of GDP spending, it includes details on the fraction of freshly formed value that is invested instead of consumption.

Forecasts made by the Other Bodies

Indian economic growth is expected to climb by 7% in FY23, down from 7.8% in the global rating agency Fitch's projection for June 2022. In contrast to its prior projection of 7.4%, it now anticipates that the GDP would drop significantly even more, to 6.7% in FY24. 

According to India Ratings, GDP would climb by 7.2% in the July–September financial year (FY 23), 4% in the October–December quarter, and 4.1% in the February–March quarter. "It will take a while to make up for the production that was lost due to COVID-19. 

According to our projection, India will only be capable of catching up to pre-pandemic growth momentum by FY35, even if GDP climbs at a pace of 7.6% year after FY23.

About the Main Economic Force

India's internal economic activity, which has demonstrated more robust than the rest of the globe, is nevertheless the country's strongest resource, based on the agency. The company stated that it intends the growing momentum to sustain, with the following quarters' average growth projected to hover all around the mid-single digit range, primarily propelled by the approaching festival season.

They concluded from the analysis that the "K-shaped" recovery was not aiding wage growth, notably for the population that comprised the lowest half of the earnings distribution, nor was it allowed for an expansion of consumption demand. Since FY19, the real wages (adjusted for inflation) for the household sector, which represents 44–45% of the gross value added, have grown at rates that have been nearly flat or even negative. Real wage growth in June 2022 was approximately minus 3.7% in urban regions and negative 1.6% in remote regions, the report indicated.

What has been the Growth projected until now?

Despite the low base of the corresponding period of 2021–2022, when economic activity was substantially disrupted by the Delta wave of the outbreak, India's Q1–FY23 GDP came in at 13.5%. In comparison to Q4-FY22, the GDP shrank 9.6 percent sequentially in Q1-FY23. The GDP growth rate of 16.2 percent for Q1-FY23 was projected by the RBI. Following the release of the official statistics, a number of financial institutions and financial organizations drastically reduced their predictions for the current fiscal year's economic growth. State Bank of India, Citigroup, Goldman Sachs, and the rating organization Moody's are examples of these.