The country’s economic growth is likely to have slowed down to 4.6% in the October-December quarter, Reuters reported on Friday citing a poll of economists.
The Indian economy grew by 13.5% in the first quarter (April-June) of the current financial year and by 6.3% in the second quarter between July and September, according to government data.
Chief Economic Adviser V Anantha Nageswaran had attributed the reduction in the figures to the fading away of the base effect, which meant that the growth figures from the first quarter were unusually high on account of being compared to weaker economic activity during the pandemic.
For the October-December quarter, 42 economists polled by Reuters predicted growth figures ranging from 4.0% to 5.8%. However, all of them projected growth to be lower than the previous quarter.
According to the poll of economists, growth in the Indian economy is likely to slow down further to 4.4% in the ongoing January-March quarter. The country’s economy is projected to grow by 6.0% in the financial year 2023-’24 as a whole, according to Reuters
Commenting on the figures, Sakshi Gupta, principal economist at HDFC Bank, said: “There are base effects that are normalizing and pulling down the annual numbers. The support from agriculture might be lower and also manufacturing could be a drag.”
Gupta said that inflation remains very high and interest rates are increasing. She added that pent-up demand has now started moderating.
The government’s annual Economic Survey released on January 31 predicted that India’s gross domestic product would grow by 6% to 6.8% in 2023-’24. It forecasts a baseline GDP growth of 6.5% in real terms in 2023-’24.
The Indian economy grew 8.7% in 2021-’22.
On February 8, the Reserve Bank of India increased the repo rate by 25 basis points, or 0.25%, to 6.5%. The repo rate is the interest rate at which the central bank lends money to commercial banks.
Central banks typically increase key lending rates in order to curb inflation. Higher key lending rates translate into high interest on loans disbursed by commercial banks. This, in turn, keeps a check on discretionary spending by consumers.
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