Driven by the services sector, India has recorded a growth rate of 7.8 in the April-June quarter of the current financial year– the highest in four quarters. The GDP growth rate is in sync with market expectations. Importantly, India remains the fastest-growing major economy in the world. While in the January to March quarter, India’s economy expanded 6.1 per cent, for the first quarter of the previous fiscal year, the growth rate was 13.1 per cent.
Neighbouring China posted a growth rate of 6.3 per cent in the April-Jun quarter. Though the growth rate was higher than 4.5 per cent registered in the January-April period, it fell short of expectation.
India’s nominal GDP –based on current prices grew by 8 per cent in the April to June period compared to 27.7 percent in Q1 FY 2022-23.
India’s private consumption grew at 6.0 per cent compared to 2.8 per cent in the January-March period. However, the manufacturing sector growth decelerated to 4.7 per cent in the first quarter of the current fiscal compared to 6.1% in the year-ago period.
The Reserve Bank of India estimated a growth rate of 8.0 per cent for April-June quarter of 2023-24. A Bloomberg survey had pegged India’s growth rate at 7.8 per cent for the first quarter, while Reuters projected 7.7 per cent. The State Bank of India in its assessment said that India would grow at 8.3 per cent.
“India’s economy is expected to remain robust even for the rest of the financial year, though the growth rate is likely to be lower than what we saw in the first quarter. Despite the relatively lower growth rate, India should be able to clock a healthy growth rate,” Soumya Kanti Ghosh, Chief Economist, SBI Group told India Narrative.
The RBI has projected the full year’s growth rate at 6.5 per cent. According to the central bank’s estimate, India’s growth rate in the second quarter will be 6.5 per cent, 6.0 per cent in the thirds and 5.7 per cent in the fourth.
S&P Global, in its recently released report, noted that after rapid economic growth of 7.2 per cent in 2022-23, India’s economic momentum primarily owing to domestic demand, has remained strong in the first half of 2023.