The Indian economy grew by 13.5% in the first quarter of the fiscal year (April to June) pushed by a rebound in private consumption generated by the fading of fears of covid -19, the biggest increase in the last year but below the expectations of the Reserve Bank of India (RBI, central bank).
“It is estimated that the GDP in the first quarter of 2022-2023 (…) will show a growth of 13.5%,” the Central Statistics Office (CSO) reported on Wednesday in a statement.
These data represent the largest expansion of the Indian economy since the first quarter of last fiscal year, when the Indian GDP increased by 20.1%, after the setback caused by the successive waves of the coronavirus.
The current growth was supported by the rebound in private consumption and the progressive return to normality of the sectors that work with the public, such as the hotel industry or transport, after the decline of the covid-19 pandemic and the relief of the restrictions.
Despite widely exceeding the growth rate of the previous quarter, which was 4.1%, the expansion of the Indian economy did not meet the estimates of the RBI, which in early August predicted a growth of 16.2% for this period of the fiscal year.
According to the projections of the issuing entity, the Indian GDP would increase by 7.2% at the end of the current year.
One of the main challenges to achieve this objective will be to alleviate the inflationary pressure that India is experiencing, currently above the tolerance level of 6%.
With the aim of reaching this margin, the RBI raised interest rates to 5.4% for the third time at the beginning of the month, after last June 8 they rose half a point to 4.9% and last May they increased by 40 basis points to 4.40%, the first time it changed this key indicator in a year.
However, RBI estimates forecast inflation to be 6.7% at the end of the current fiscal year.