Indian economy likely gained pace in March qtr, data to be released today

By Manoj Kumar

NEW DELHI (Reuters) – India is set to release data on Wednesday that is expected to show the economy grew by 5% in the January-March quarter from a year earlier, accelerating from 4.4% in the previous quarter due to steady urban demand and government spending.

The median forecast from a Reuters poll of economists hinged on the robust performance of services like travel and retail, and the boost given to demand by falling food prices and the drop in oil prices globally.

Moving forward, India could be at the mercy of a potential global slowdown.

“Slowing global growth, protracted geopolitical tensions and a possible upsurge in financial market volatility” could pose downside risks to the economic growth, Reserve Bank of India, the central bank, warned in its annual report on Tuesday.

The last official estimate for the full 2022/23 fiscal year put growth at 7%, though that could be revised when the GDP data is released on Wednesday at 1200 GMT. Some private economists reckoned growth in the year to March 31 could turn out around 6.8%.

During the March quarter, high frequency indicators showed that a rise in urban incomes had boosted sales of expensive cars, Apple mobile phones, and air travel.

The performance looks less impressive considering that the economy was still working through the tail-end of the pandemic during the previous year.

Farm and manufacturing workers suffered flat growth in real wages due to high inflation, and that kept sales of motorbikes, low-end consumer goods and railway traffic below pre-pandemic levels.

Prime Minister Narendra Modi remains widely popular after nine years in power, but his Bharatiya Janata Party lost assembly elections in the southern state of Karnataka this month as the opposition Congress party promised to step up subsidies for households hit by inflation and unemployment.

Modi must call for a national election by early 2024, and there a several more state polls due before then.

Lack of good paying jobs remains a major issue among the youth as reflected in unemployment rate rising to 8.11% in April and more workers joining the workforce, according to Mumbai-based think tank Centre for Monitoring Indian Economy.

(Reporting by Manoj Kumar; Editing by Simon Cameron-Moore)