The Q3 growth estimates made by the National Statistical Office provide a real test for the state of the Indian economy. The economic growth in the third quarter slowed down to 4.4 per cent from 6.3 per cent in Q2. Higher growth in the first two quarters of FY 2022-23 might have been on the account of a lower base effect because the first half of FY 2021-22 saw a slow economic recovery on account of the second wave of the COVID-19 pandemic. Interestingly, the NSO data has kept the growth projection for FY 2022-23 intact at 7 per cent, despite the slowdown in Q3 and an upward revision of GDP growth in FY 2021-2022 from 8.7 per cent to 9.1 per cent — leading to a higher base effect. The rather optimistic projection requires the Q4 GDP growth to stand at 5.1 per cent, which appears to be a tough shot. It is difficult to locate the basis on which the overall growth projection for FY 2022-23 is predicated. The four major drivers of GDP growth are — private consumption expenditure, government consumption expenditure, gross fixed capital formation, and net exports/imports. Private consumption expenditure, which contributed 61.6 per cent of the GDP in Q3, is witnessing a dip — implying that the most prominent engine of GDP growth is not performing up to the mark. Government consumption expenditure, which accounts for 10 per cent of the GDP, is also on a downward slope. On the gross capital formation front, however, credit to the government’s continued emphasis on capital expenditure, there is a ray of hope. However, the incentive for investment, particularly from the private sector, is diluted by the dip in consumption which drives investment. This leaves us to the fourth and final front — net exports/imports. India is notorious for being an import-dependent country with only a limited edge in exports over certain countries in certain items. Given the tumultuous geopolitical environment and the related slowdown in economies worldwide, how much export advantage can India garner is not a difficult question to answer! It is against this backdrop that experts are finding it hard to align with the NSO’s projection of 7 per cent GDP growth for FY 2022-23. Even if the 4.4 per cent growth rate of Q3 continues in Q4, the annual GDP growth rate will be around 6.8 per cent. Gross Value Added, which factors national income from the supply side, is considered by many as a more appropriate tool for sectoral comparisons. The highlight for Q3 has been the second consecutive quarterly dip in manufacturing sector GVA — creating a dent in overall GVA growth to 4.6 per cent in Q3 against 5.5 per cent in Q2. The dip in manufacturing GVA is indeed an aspect to worry about because the sector contributes immensely to job creation. Unemployment has been a weak spot in the Indian economy for quite some time. Construction sector GVA, on the other hand, registered an uptick from 5.8 per cent in Q2 to 8.4 per cent in Q3. The services sector GVA also witnessed an overall upward trend. The rise in construction GVA can be partly attributed to the government’s continuous capex push. An important factor that may be playing a huge role in slowing down the growth of the Indian economy is the consecutive hikes in repo rate by the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI). While the impact of the rate hikes on easing the inflationary pressure is eagerly awaited, one should also be wary of the downsides on the growth front. A few members of the MPC have been constantly voting in favour of stalling or drastically easing rate hikes. Perhaps it is time to take the red flags raised by them more seriously. It is true that containing inflation is important for ensuring sustainable and risk-free growth, but equally important is to ensure that the primary engine of growth — private consumption — is not thrown off-balance. The government may also consider striking the right balance between managing fiscal deficit and government consumption expenditure. The time, it seems, has arrived for prioritising growth.