India to remain brightest spot in world economy with 5% growth in Jan-March quarter

India on Wednesday is likely to reveal data that will show the economy grew by 5 per cent from a year earlier in the January-March quarter, picking up speed from the previous quarter’s 4.4 per cent growth thanks to stable urban demand and government spending.
The strong performance of industries like travel and retail, as well as the boost to demand provided by declining food prices and the decline in oil prices globally, were key factors in the economists’ median projection from a Reuters poll (INGDPQ=ECI).
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 per cent, 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 31 March could turn out around 6.8 per cent.
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 per cent in April and more workers joining the workforce, according to Mumbai-based think tank Centre for Monitoring Indian Economy.
With inputs from agencies
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