India’s GDP increased by 7.8% from April to June!.. the most in four quarters.
The GDP growth was driven by a sequential acceleration in the rate of development of the financial services sector, which increased by 12.2%.
Services and public investment drove India’s resilient economy during the first quarter (April–June) of the current fiscal year, according to official figures released on Thursday.
According to the most recent estimates, the growth of the gross domestic product (GDP) increased to a four-quarter high of 7.8% from a year ago, up from 6.1% in the previous quarter (Jan.-Mar. FY23).
However, growth in the first three months of the current fiscal year was less than the equivalent period in the previous fiscal year (2022-23) on an annualized basis, when it was 13.1%. Undoubtedly, base effect contributed to the stronger growth in the first quarter of 2022–23, which came after a significant uptick as the economy recovered from the Covid–induced recession.
India continues to have one of the fastest expanding economies, especially now that China’s recovery is stalling, according to Thursday’s GDP readings.
GDP, which represents the value of all products and services generated in an economy, is the broadest indicator of economic growth.
The largest lender in the nation, the State Bank of India (SBI), had predicted that economic activity would increase by 8.3% in the first quarter, while a credit ratings firm, ICRA, predicted that India’s growth would be 8.5%. The six-member monetary policy committee of the Reserve Bank of India (RBI) had predicted Q1 growth to be 8%.
According to a statement from the statistical office, “Real GDP or GDP at Constant (2011–12) Prices) in Q1 2023–24 is estimated to attain a level of 40.37 lakh crore, as opposed to 37.44 lakh crore in Q1 2022–23.”
Gross value added, which excludes indirect tax and subsidies, increased by 7.8% in the most recent quarter (Jan.-March 2022-23) as opposed to 6.5% the previous quarter.
The GDP growth was driven by a sequential acceleration in the rate of development of the financial services sector, which increased by 12.2%. Despite growing at 4.7%, manufacturing increased from the previous quarter’s 4.1%.
During the first quarter of 2023–24, the services sector’s economic activity all fared well. The growth in trade, lodging, transportation, and communication was 9.2%.
However, economists cautioned that a deepening El Nino has increased risks to economic expansion and could lead to an increase in inflation. El Nino is a meteorological trend characterized by an increase in Pacific Ocean temperatures that has global repercussions.
El Nino events in India are linked to drier summers and drought, which might reduce food production and drive up inflation. In July, consumer price growth exceeded the Reserve Bank of India’s (RBI) acceptable limit of 6% and reached a 15-month high of 7.44%. The increase in the consumer price index in July can be attributed to the 11% increase in food costs.
Since May of last year, the RBI has increased its benchmark repo rate by 250 basis points (bps), and economists anticipate that it will maintain this rate for the remainder of 2023 while it assesses the effects of prior increases. One tenth of a percentage point is referred to as a basis point.
In Q4 FY23, private consumption, as measured by private final consumption expenditure, increased by 2.8%. Government final consumption expenditure increased 2.3% while investments, as measured by gross fixed capital formation, climbed by 8.9%.
The third-largest economy in Asia is predicted to grow between ‘7% and 8%’ annually and establish a solid manufacturing foundation in order to generate employment for millions of people. The farm industry currently employs 45% of India’s labor but only accounts for 18% of its economic output.
