India's Jan-March quarter GDP growth at 6.1% y/y

Wednesday,   31-May-2023   05:41 PM (IST)

India's economic growth accelerated to 6.1% in the March quarter, government data showed on Wednesday, boosted by government and private capital spending even as private consumption remained sluggish. Wednesday's reading showed India remains one of the fastest growing emerging economies, especially with China's recovery stumbling. The government expects growth could remain around 6.5% in the current fiscal year, despite risks emerging from a global slowdown. 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 2022/23 fiscal year through March, up from a revised 4.5% in the previous quarter. The full-year growth estimate was revised to 7.2% from an earlier estimate of 7%. India's economy grew 9.1% in 2021/22. 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 Reserve Bank of India (RBI) has raised its benchmark repo rate by 250 basis points (bps) since May last year and economists expect it to leave the rate unchanged for the rest of 2023 as it waits to see the 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 with a revised 1.4% contraction in the previous three months. 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 with an upwardly revised 4.7% in the previous quarter.