According to a recent Reuters poll, economic growth in India is forecasted to reach 6.6% in the three months ending on December 31st, indicating a slowdown from the 7.6% growth recorded in the previous quarter and 7.8% growth in the July quarter. It’s worth noting that India’s fiscal year commences on April 1st.
India’s Economic Growth Likely Dipped Below 7% for First Time in Current Fiscal Year, Driven by Weakness in Manufacturing and Consumption.
India is anticipated to register a growth rate of 6.6% for the three-month period ending on December 31st, as indicated by a Reuters poll. This represents a deceleration from the growth rates of 7.6% and 7.8% observed in the previous two quarters, respectively. It’s important to note that India’s fiscal year commences on April 1st.
At 1200 GMT on Thursday, India is scheduled to unveil the gross domestic product (GDP) data for the quarter, along with the revised estimate for the full fiscal year ending on March 31st.
Gaura Sen Gupta, an economist at IDFC First Bank, remarked that there is an anticipation of some moderation in GDP growth for October-December, particularly attributed to softer growth in the manufacturing sector.
Sen Gupta further noted that consumption growth in the quarter exhibited mixed trends, with retailers reporting a slowdown in sales growth.
Earlier this month, market researcher NielsenIQ reported a sequential slowdown in sales volume growth within the Indian consumer goods sector during the December quarter.
Retailers, particularly in rural areas, have faced challenges with sluggish recovery from the COVID-19 pandemic. This slow recovery has been attributed to high living costs and weak wage growth, despite India’s impressive economic growth rate.
Major companies such as Hindustan Unilever and Britannia Industries have posted subdued quarterly profits due to lackluster rural demand and heightened competition.
Despite this slowdown, India is poised to maintain its status as one of the world’s fastest-growing economies, with an estimated growth rate of 7.3% for the current fiscal year according to the government’s first advance estimate. This growth outlook contrasts with a slowing China and a eurozone narrowly avoiding a technical recession.
The Indian government is set to revise its full-year growth estimate on Thursday. Economists predict that India will continue to be one of the fastest-growing economies in the foreseeable future, buoyed by Prime Minister Narendra Modi’s reform initiatives.
Kaushik Das, an economist at Deutsche Bank, anticipates long-term real GDP growth of minimum 6% to 6.5% and nominal GDP growth of 10% to 11%, significantly outpacing comparable emerging market countries over the next two decades.
Modi’s administration has prioritized infrastructure spending and unveiled incentives for the manufacturing sector, particularly in areas such as phones, electronics, drones, and semiconductors. These measures aim to enhance India’s competitiveness against countries like Vietnam and Thailand.