By Manoj Kumar and Nikunj Ohri
NEW DELHI (Reuters) – India’s economic growth accelerated to 6.1% in the March quarter from a year earlier, government data showed on Wednesday, boosted by government capital expenditure even as private consumption remained sluggish.
Asia’s third-largest economy expanded faster than the forecast of 5.0% by economists in a Reuters poll in the last quarter of the fiscal year 2022/23 ending in March, up from a revised 4.5% in the previous quarter, the data showed.
The full-year growth estimate was revised to 7.2%, above an earlier estimate of 7%. India’s economy grew 9.1% in 2021/22.
Wednesday’s reading showed India remains one of the fastest growing emerging economies, especially with China’s recovery stumbling.
Economists, however, warned that the global slowdown and volatility in financial markets pose a risk to exports and the growth outlook in coming quarters.
“The growth outlook is (not) without risks – particularly in regards to the monsoon progress and recession risks globally,” said Sakshi Gupta, economist at HDFC bank.
She added growth numbers, however, reflected optimism for the Indian economy despite global headwinds.
The Reserve Bank of India (RBI) has raised its benchmark repo rate by 250 basis points (bps) since May last year and economists expect it would leave the rate unchanged for the rest of 2023 as it waits to see the economic impact of earlier hikes.
The manufacturing sector, which for the past decade has accounted for just 17% of the economy, expanded 4.5% year-on-year in the March quarter, compared to a 1.1% contraction in the previous quarter.
India’s goods and services exports, accounting for about
22% of GDP, rose 13.8% in 2022/23 to $770 billion amid a gloomy global environment while imports rose 17.4% to $892 billion.
Forecasts for normal monsoon season rains in the next four months could support the farm sector, which grew 5.5% year-on-year in the March quarter compared to 3.7% in the previous quarter.
UNEVEN RECOVERY
Private consumption, which accounts for nearly 60% of the economy, grew 2.8% on-year compared to 2.1% in the previous quarter, while capital formation, an indictor of investment, rose 8.9% on-year from a downward revised 8% in the previous quarter.
Federal government spending, constituting about 10% of the GDP, rose 2.3% year-on-year in the March quarter, compared to a revised 0.6% contraction in the previous quarter.
Prime Minister Narendra Modi, who remains popular after nine years in power, has stepped up capital spending in the past few years to build roads, railways and new airports to revive the economy after the pandemic.
Economists said the world’s most populous country needs to grow 7-8% a year and build a strong manufacturing base to create jobs for millions of workers. Currently, 45% of India’s workforce is employed in the farm sector, which contributes just 15% to the economy.
The lack of well-paying jobs remains a major issue among the youth, as reflected in the unemployment rate rising to 8.11% in April, even as more people joined the workforce, according to Mumbai-based think tank Centre for Monitoring Indian Economy.
(Additional reporting by Sarita Chaganti Singh and Shivangi Acharya in NEW DELHI and Nishit Navin in BENGALURU; Editing by Andrew Heavens and Emelia Sithole-Matarise)
Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibilty for its content.