The National Statistical Office last week came out with the provisional Gross Domestic Product (GDP) data for 2021-22, along with growth data for the January-March quarter of the financial year. According to the estimate, India's GDP growth is seen at 8.7 percent against 6.6 percent contraction in the year 2020-21 and at 4.1 percent growth in Q4 against 1.6 percent during the January-March period of FY21. This data set appears encouraging, at least on the surface.

A deeper look into the GDP data shows that growth of gross value added (GVA) –a basic constituent of GDP– stands at an impressive 8.1 percent for the year 2021-22, but GVA growth during Q4 stands only at 3.9 percent. Even during the third quarter of the financial year, GVA growth was 4.7 percent, and the 'encouraging' 8.1 percent GVA growth for 20121-22 was driven mainly by 18.1% GVA growth in the first quarter for FY22.

Now, look at the growth in taxes receipts (taxes received minus subsidies paid) which stands at Rs 11.3 trillion for FY22, which combining with GVA of Rs 136.05 trillion, pushes our GDP to Rs. 147.35 trillion in FY22.While growth in taxes receipts looks encouraging, one should not overlook the fact that growth in taxes receipts had been higher at Rs 12.9 trillion in 2019-20. Also, with food, fuel and fertilizer subsidies likely to go up in the current year, it seems growth in taxes receipts will be a challenge area even in 2022-23.

It is also discouraging that manufacturing activities registered a modest growth of 9.9 percent in FY22, and with global demand slowing on geopolitical issues, India’s manufacturing sector may decelerate further in the coming months. In addition, export curbs on steel and other commodities may hit the sector further. In this situation, it is imperative that the government steps in with some strategic plan to safeguard the economy.

I invite your opinions.