India’s economic growth rises to a four-quarter high of 7.8% in Q1
“Rural demand is on a recovery mode and government’s sustained capital expenditure push is crowding in private investments,” said chief economic advisor, V Anantha Nageswaran, on Friday post the data release.
While experts point out that growth is likely to slowdown in the coming quarters as the base effect wanes, they indicated that a consumption boost closer to the end of third quarter may provide some succour to full year growth.
“We are going to now be entering to run-up to elections, which leads to a sharp increase in consumption expenditure.
That’s the silver lining,” said Pronab Sen, former chief statistician of India.
“Centre seem to be reserving its expenditure for the latter part of the year,” Sen added, noting that the government is preserving fiscal space for a big boom spend starting end of third quarter.
Green shoots
Economists said that uncertain conditions could pose a risk to economic growth, but they pointed out that policy thrust could sustain momentum.
“Factors like sustained buoyancy in services momentum and policy thrust to increase trend growth could counter downward pressures,” said Madhavi Arora, lead economist, Emkay Global Financial Services, indicating risks from falling income growth in urban sector, shrinking corporate profitability, and demand-curbing monetary policies.
An ET Poll of 22 economists, conducted a fortnight ago had pegged median growth for FY24 at 6.2%, slower than 6.5% projected by RBI.
Private capex revival, economists said, was important to sustain growth in the coming quarters.
“Amid evolving conditions, private capex will have to match up the pace to sustain growth momentum,” said Rajani Sinha, chief economist, CareEdge.
While the growth in gross fixed capital formation,
