India's economy grew by 7.8% for the quarter ending in June, outperforming a Reuters poll that anticipated a 7.1% increase. This growth was primarily fueled by strong performances in the financial, real estate, information technology, and professional services sectors. Although agriculture showed only modest growth, improvements in manufacturing and services were notable.
Aastha Gudwani, Barclays' India chief economist, noted that consumer demand remains strong, with only seven out of 20 high-frequency indicators suggesting a slowdown compared to the previous quarter.
Despite this positive growth, the Reserve Bank of India (RBI) has cautioned that growth may decelerate over the financial year due to a turbulent global economic environment, high energy prices, and supply chain issues. The RBI projects a growth rate of 7.0% for the June quarter and 6.7% for the financial year ending March 2027.
Additionally, the potential impact of El Niño on the monsoon could threaten agricultural output and rural demand. Inflation has been rising, reaching 4.45% in July, yet the RBI opted not to increase interest rates in August, contrasting with actions taken by some other Asian central banks