India’s gross domestic product (GDP) is estimated to grow at 8.9% in 2021-22 instead of 9.2% estimated earlier, with year-on-year growth in the October to December 2021 period slipping to 5.4% from 8.5% in the previous quarter, as per the second advance national income estimates released on Monday.

Gross Value-Added (GVA) in the economy is expected to grow by 8.3% this financial year, from a 4.8% contraction in 2020-21, the National Statistical Office (NSO) said. Barring the contact-intensive segment of Trade, Hotels, Transport, Communication & services related to Broadcasting, all sectors are expected to surpass pre-pandemic GVA levels this year.

India’s GDP had shrunk 6.6% in 2020-21, with the first half of the year recording a sharp contraction before GDP resurfaced to clock 0.7% growth in the October to December 2020 quarter.

Economists were underwhelmed at the 5.4% growth recorded in the same quarter of 2021, and expect the full year growth hopes for this year to be pared further from the 8.9% projected by the NSO, especially in light of the impact of high oil prices on growth as well as inflation trajectories.

“While an adverse base was expected to flatten growth in the third quarter (Q3, 2021-22), the initial estimates of the NSO are sorely below our expectations, with a marginal rise in manufacturing and a contraction in construction that is surprising despite the heavy rainfall in the southern states,” said Aditi Nayar, chief economist at ICRA

Bank of Baroda chief economist Madan Sabnavis also flagged the meagre 0.2% growth in manufacturing in Q3 as ‘a disappointment’ especially since corporates have established healthy growth in profits. “This means the unorganised sector and small and medium enterprises have still not gotten up,” he said, further expressing concern about the dipping share of household consumption.

“To achieve 8.9% growth, the GDP has to grow 4.8% in the fourth quarter, which looks challenging given the considerable restrictions posed by the pandemic’s third wave, the ongoing geopolitical tensions and persistent supply challenges in areas like coal, power and semiconductors,” said M. Govinda Rao, chief economic advisor at Brickwork Ratings, adding that higher crude oil prices may compel a revisit of these GDP estimates for the year.

The GDP growth rates for the first and second quarters of 2021-22 were revised upwards marginally by the NSO from 20.1% to 20.3% and 8.4% to 8.5%, respectively.