India's gross domestic product (GDP) grew 13.5% in the first quarter (April to June) of the ongoing fiscal year (FY23) over the same period last year, data released by the National Statistics Office of the Ministry of Statistics and Programme Implementation shows.
The quarterly estimates of the Indian economy saw it being valued at ₹36.85 lakh crores, compared to ₹32.46 lakh crores in the same quarter last year in constant prices (which adjusts for inflation).
The numbers missed a growth estimate of 15.2%, according to a poll conducted by Reuters. However, a double-digit growth was largely expected. They also attribute last quarter's growth performance to a base effect, where the initial value of something small that even a miniscule actual growth would translate to a large percentage change.
Further, the income side of various sectors of the economy, measured by the gross value added, grew 12.7% quarterly (again measured over the same period in the previous year).
While these numbers may at face-value be indicative that the Indian economy is shrugging off the last remnants of the slowdown caused due to the now receding COVID-19 pandemic, economists have been cautious about celebrating too soon.
Going ahead, it is expected that inflation and unemployment would soon catch up, according to another Reuters poll. Consumer prices have been above the Reserve Bank of India's upper tolerance band of 6% since the beginning of the year, which has only worsened since the start of the Russia's military operations in Ukraine starting February 24. In April, India saw an inflation rate going as high as 7.79%.
Economists expect the ongoing quarter's (July to September) growth rate to temper to 6,2%, 4.5% and 4.2% in the current and subsequent two quarters respectively, adding that initial impressive growth rates would shadow over the economy slowing in coming months.
The economy would also have to prepare for more interest rate hikes till the end of year, where the benchmark policy repo rate - the rate at which banks borrow from the Reserve Bank of India - is expected to touch 6% by year end. Such moves dry up liquidity and make borrowing more expensive.
In the last financial year, the economy grew 8.7% overall, but quarterly growth slowed to 4.1% in the last quarter.
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