India’s economy continues to grow with the quickest rate at 7.8%
India's GDP increased by 7.8% from April to June of 2023–24, which was the highest GDP growth rate in the previous four quarters thanks to the services sector's double-digit growth.
The April–June quarter saw India’s economy expand at its fastest rate in a year, supported by strong services activity and strong demand, but future growth may be constrained by a monsoon that is drier than usual.
GDP growth accelerated from the 3.03% increase seen in the three months to the end of March to 7.8% rise on an annual basis in the quarter.
Since the June quarter of 2022, when growth was 13.1%, this reading has been at its greatest. India continues to be among the big economies with the strongest growth, particularly now that China’s post-pandemic recovery has stalled. V. Anantha Nageswaran, India’s chief economist, kept his full-year growth prediction of 6.5%.
Although external variables present a negative risk, growth prospects seem promising, according to Nageswaran.
India’s GDP statistics
India’s GDP statistics was good, according to Thamashi De Silva at Capital Economics, despite the Reserve Bank of India’s tightening of monetary policy. Since May 2022, the RBI has increased its interest rate by 2.5 percentage points.
“The push is provided by the services sector where both trade, transport and finance and real estate have grown by 9.2% and 12.1% in high base growth rates,” stated Madan Sabnavis, a bank of baroda economist.
Growth in the construction industry was likewise exceptionally strong (7.9%).
However, the majority of analysts issued a warning that upcoming dry conditions would hinder growth.
After the driest August in more than a century, India is set to experience ordinary rainfall in September.
Suvodeep Rakshit, senior economist at Kotak Institutional Equities, said “Going forward, we need to watch for risks to the agriculture sector, sustenance of [capital expenditure] push from central and state governments, global demand conditions, and lagged impact of interest rate hikes”.
Private consumption, which makes up almost 60% of the Indian economy, increased by roughly 6% year over year in the April–June quarter, up from 2.8% in the March quarter, while manufacturing increased by 4.7%, up from 4.5% in the prior three months.
However, the increase in capital formation, a measure of investment, slowed from 8.9% in the preceding three months to roughly 8% on an annual basis.
Retail inflation in India reached its highest level in 15 months in July as prices for vegetables and cereals surged.
Nageswaran stated that it is necessary to monitor commodity prices due to low reservoir levels and that “there is no real possible concern inflation will spike out of control.”
According to Rajani Sinha, Chief Economist at CareEdge Ratings, “high food inflation for an extended period of time could weigh on consumption growth.”
The BJP claimed earlier in the day that a number of growth indicators showed India’s economy was still expanding at the fastest rate in the world and credited “Modinomics” for the success.
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