India's Gross Domestic Product (GDP) and Gross Value Added (GVA) data was released on Thursday. The GDP growth rate stood at 7.8 per cent while GVA at basic prices grew by 8 percent. Economists said that the strong performance in Q1 was largely expected. However, a close look at the data shows that manufacturing GVA grew by 1.94 per cent.
The data for previous quarters also suggests that the growth in GVA has been subdued for some time now. In the September 2022 quarter, the GVA growth stood at 3.34 percent. In the following quarters as well, the GVA growth was slow. In the final quarter of FY23, manufacturing GVA grew by 6.13 percent.
The value addition of manufacturing in India's GDP has been struggling for some time now. According to World Bank data, the value added percentage of manufacturing in India's GDP has declined from 16 per cent in 2015 to 13 per cent in 2022.
In terms of capex, the data for project completion showed that in Q1, the government did most of the heavy lifting. CMIE data till June 11 showed that the out of Rs 6.87 lakh crore worth of projects completed, government's share stood at Rs 6.75 lakh crore.
Despite the expanding Purchasing Managers Index (PMI) number and positive growth in IIP, the growth in Manufacturing GVA has not picked up. In Q1 of previous financial year, it stood at 17.2 percent.
While manufacturing did not post strong GVA growth, public administration and other services, financial services and electricity, gas, water supply and other utility services saw significant growth in GVA. The growth rate stood at 13.66, 12.12 and 12.82 for the respective categories, government data showed.