Economists applaud India's robust 7.2% GDP growth, driven by services and consumption
India's GDP expanded by 7.2% in the fiscal year ending in March, driven by the services sector and increased consumption, positioning India as one of the top-performing major economies in the world.
PremiumOfficial figures released on Wednesday revealed that India's Gross Domestic Product (GDP) expanded by 7.2 per cent in the fiscal year ending in March. This growth was primarily driven by the services sector and increased consumption, positioning India as one of the top-performing major economies in the world.
However, in the fourth quarter of the fiscal year (January to March), the Indian economy grew at a slightly lower rate of 6.1 per cent compared to the corresponding period in the previous year, as indicated by data from the National Statistical Office.
The Reserve Bank of India (RBI) has implemented a series of interest rate hikes, totalling 250 basis points (bps), since May of the previous year. Economists anticipate that the RBI will maintain the benchmark repo rate at its current level for the remainder of 2023, as it monitors the effects of the previous rate increases before making any further adjustments.
Economists, however, warned that the global slowdown and volatility in financial markets pose a risk to exports and the growth outlook in coming quarters. Here are the economists' responses to the recently released GDP data:
"The growth outlook is (not) without risks - particularly in regards to the monsoon progress and recession risks globally," said Sakshi Gupta, an economist at HDFC Bank.
Aditi Nayar, Chief Economist at rating agency Icra, said, “GDP expansion in Q4 FY2023 was appreciably higher than expected while remaining uneven and confirming the hopes of a sequential pickup in the pace of growth of economic activity to 6.1 per cent from the bottom of 4.5 per cent seen in Q3 FY2023."
Icra has projected growth of real GDP in FY24 at 6 per cent, with a downside risk of up to 50 basis points in the event that an El Nino affects the monsoon rains.
Economists say more and more job-seekers, especially the young, are looking for low-paid casual work or falling back on unreliable self-employment, even though the broader Indian economy is seen growing at a world-beating 6.5% in the financial year ending in March 2024.
Daniel Leigh, who heads the World Economic Studies division in the IMF's Research Department, in April called the country "one of the bright spots in the global economy".
State Bank of India Chief Economic Adviser Soumya Kanti Ghosh added in a note on Friday that the manufacturing sector was expected to rebound, while the boost in government spending would "strengthen job creation and demand".
The unemployment rate, which has been rising this year and reached 8.11 per cent in April according to data from the Centre for Monitoring Indian Economy, could weigh on the economy.
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