India's GDP may have grown in double digits in April-June

A year ago, economic activity was disrupted partially due to shutdowns in several states amid the second wave of covid.

The median prediction for gross domestic product (GDP) growth was at 15.2%, with forecasts ranging between 10.5% and 17.8%. Most economists said pent-up demand provided a significant boost to growth in the June quarter. Official data will be released on 31 August.

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However, despite the double-digit growth, the median estimate implies the economy contracted 8.3% on a sequential basis. But a sequential dip in India’s GDP in Q1 is a typical phenomenon.

Elaborating on her growth forecast of 16%, Radhika Rao, economist at DBS Bank, said: “Broad-based improvement in vaccination rates and relaxation of lockdowns benefited urban consumption, particularly on the back of a resumption in services sector activity. Base effects will have an outsized impact, as (economic) activity in the comparative year-ago period was adversely affected by the onset of the Delta variant."

However, many economists said the impact of high commodity prices and extreme heatwave conditions during summer will weigh on GDP growth. “The recent moderation in commodity prices, if sustained, should help to ease inflationary, as well as margin pressures and translate into improved demand for discretionary goods and higher value-added growth, respectively,“ said Aditi Nayar, chief economist, ICRA.

The Reserve Bank of India (RBI) expects 16.2% economic growth rate in Q1FY23.

Of the 21 economists polled, 16 gave their estimates for GDP growth for FY23. All but one said India will grow at 7%, or more, this fiscal. Several international organizations and rating agencies have cut India’s FY23 growth outlook, citing sluggish global growth and impending global recession. However, they said, India will remain one of the fastest growing economies in the world.

“The resilient growth backdrop means the RBI will retain its focus on containing inflation, and that makes its policy choices relatively clear for the short-term," said Rahul Bajoria, Barclays’ chief India economist, in a report on 24 August. “The Reserve Bank remains on a path of front-loaded hikes, as was evident from the August MPC (monetary policy committee) minutes."

The minutes of the monetary policy committee meeting in August showed the MPC intends to continue with its ‘whatever- it-takes’ approach to ensure macroeconomic stability.

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