India’s GDP grows by 7.8 per cent in quarter ending June 2023
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India’s Gross Domestic Product (GDP) data for the quarter ending June 2023 was released on Thursday by the National Statistical Office (NSO). India’s GDP in the Q1 of fiscal year 2024 grew by 7.8 per cent, compared to 13.1 per cent in the same quarter last year.
Earlier, experts also predicted that India’s GDP growth would reach 7.8 per cent, an impressive rise from a mere 6.1 per cent recorded in the previous quarter ending March 2023.
The latest dataconfirms India's stature as one of the fastest growing major economies in the world, especially since the slow recovery of China after the pandemic.
Meanwhile, the Reserve Bank of India had predicted India’s GDP growth in the specified period to be 8 per cent. For the Financial Year 2024, the RBI expected the Indian economy to grow at 6.5 per cent.
What’s behind the growth numbers?
As per economists, robust domestic demand, government investments in capital, and an emerging recovery in private investment together played a key role in driving the GDP growth numbers.
According to the government data, eight key infrastructure sectors' growth rose to 8 per cent in July 2023 from 4.8 per cent in the same month last year.
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Inflation — a concerning point
In July, inflation surged to 7.4 per cent, exceeding the RBI’s upper tolerance threshold of 6 per cent. This breach was the first in the current year. Economists suggest that there's a strong likelihood of a similar breach happening again in August.
A recent survey of 17 economists conducted by the Economic Times indicates that the median inflation projection for the fiscal year 2023-24 is 5.5 per cent, slightly higher than the RBI's estimate of 5.4 per cent.
Rural demand remains weak
A report published by CareEdge Ratings has revealed that India’s rural demand remains weak and vulnerable. The trend was induced by erratic Monsoon season, unexpected or heavy rainfall and food inflation.
However, the report said that the upcoming festival season and celebrations could potentially drive up consumer demand.
The report added that there is also a notable risk for the winter crop sowing, known as rabi, due to the considerable shortfall in reservoir levels across eastern and southern India compared to the 10-year average.
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