Economists see double-digit growth in India’s Q1 GDP

The Indian economy could show double-digit growth in the first quarter of the current financial year, helped by a recovery in contact-intensive services and a low base, according to economists.

That would mark the fastest pace of growth in four quarters in Asia’s third-largest economy. The forecasts came a week ahead of the official data release on August 31.

While several SBI economists predicted the growth to be over 15 per cent, ICRA economists said it could be 13 per cent, helped by the low base of last year when the Covid-19 pandemic hurt economic growth.

“The anticipated double-digit GDP expansion in Q1 FY2023 benefits from the low base of the second wave of Covid-19 in India in Q1 FY2022 as well as the robust recovery in the contact-intensive sectors following the widening vaccination coverage,” ICRA Chief Economist Aditi Nayar said.

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There has been a shift in demand towards contact-intensive services from discretionary goods for the mid-to-higher income groups, ICRA said.

This, along with the emerging cautiousness in export demand, and the impact of high commodity prices on volumes and margins for the industrial sector, are likely to result in relatively moderate industrial growth.

Additionally, the heat wave’s impact on the wheat harvest is expected to result in low growth of the agricultural sector in the April-June quarter. Overall, ICRA expects GDP growth in the period to trail the 16.2 per cent projected by the Reserve Bank of India’s Monetary Policy Committee.

Lead economists at the State Bank of India said they expected growth in the period to be at 15.7 per cent, with a large possibility of an upward bias.

The private final consumption expenditure in real terms might have recovered, leading to a strong recovery in consumer demand and lending support to the overall economic recovery, they said.