India’s economy grew by 13.5 percent in the April-June quarter from a year earlier, the fastest pace in a year, amid fears of growth sharply slowing this quarter and the next two as higher interest rates hit activity.
The jump came on the back of a boost in agriculture and manufacturing as pandemic curbs eased, official data released on Wednesday showed.
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Economists in a Reuters poll had forecast gross domestic product in Asia’s third-largest economy would grow 15.2 percent year-on-year in the April-June quarter, compared with 4.1 percent in the previous quarter.
The apparent big jump in growth, which is lower than the 20.1 percent annual growth registered in the same quarter the previous year, is because of the low base of the previous quarter and economists have cautioned that the growth this quarter may be followed by a slowdown.
“Going forward, with the global headwinds, India’s external sector would face a challenging time,” Rajani Sinha, chief economist at CARE Ratings said in a note emailed to Al Jazeera.
“It will be critical for domestic consumption and investment to gather momentum. The consumption demand revival has been uneven so far with weak rural demand. While lowering of inflation will provide support to overall consumption spending, uneven monsoon will play a spoiler for rural demand,” she said.
In July, the International Monetary Fund revised its growth forecast for India from 8.2 percent to 7.4 percent for the current fiscal year, which began in April.
Despite the revision, India would still be among the fastest-growing major economies in the world.
The double-digit growth in the April-June quarter comes at a time when the global economy is under strain, with most countries facing high inflation. Prices have been rising as Russia’s invasion of Ukraine continues, triggering increased prices for energy and food.
The Indian economy had been recovering from a pandemic-induced slump when a surge in Omicron-fuelled coronavirus cases starting in January prompted authorities to bring back some virus-related restrictions.
Multiple waves of COVID-19 outbreaks have badly hit India’s large informal sector, with unemployment rising to nearly 8.5 percent in August, according to data from the think-tank, Center for Monitoring Indian Economy.
India’s central bank projected inflation at 6.7 percent this fiscal year and raised its key interest rate by 50 basis points to 5.4 percent, in its third such hike since May.
The economy expanded by 8.7 percent in the previous fiscal year after contracting by 6.6 percent in fiscal year 2020-21.