India records strong 7.8 percent growth in June quarter

NEW DELHI (AFP): India’s GDP grew by 7.8 percent in the June quarter, official figures showed Thursday, despite government fears over the impact of higher consumer prices on household budgets.

The South Asian nation overtook Britain last year to become the world’s fifth-largest economy, and recently surpassed China to become the most populous country.

Its growth has rebounded since the Covid-19 pandemic — up 7.2 percent for the year to March — and has remained near the top of the pack among the world’s biggest economies.

Thursday’s figure was the highest in four quarters, with official statistics showing on-year growth of 12.2 percent for the financial, real estate and professional services sectors.

But, like other countries, India has been buffeted by global headwinds including tightening global financial conditions, the war in Ukraine and geopolitical tensions.

India’s central bank warned this month that higher food prices had hit household budgets and were expected to get worse.

Inflation edged up to 4.81 percent in June, still down from a peak of 7.79 percent last year that prompted a series of rate hikes.

Finance Minister Nirmala Sitharaman told parliament this month that the government was taking steps “to contain high prices which are hitting common citizens”.

Chief among the government’s concerns is rising food prices, with inclement weather and pest attacks in major production belts hitting staple crops such as tomatoes.

Sitharaman said the government had stepped up food imports and loosened import restrictions to ease price pressures.

India’s headline growth has improved despite residual global uncertainty, with the World Bank’s India country director Auguste Tano Kouame saying in April the country “continues to show strong resilience to external shocks”.

The International Monetary Fund forecasts 6.1 percent GDP growth for India this year.

“India is a country with growth — very strong and continuing to be strong,” IMF research department division chief Daniel Leigh said last month.