Will Indian economy bounce back with 15%-plus growth in the 1st quarter?

Amid global economic uncertainties, India will release its GDP data for the first quarter of the current financial year on Thursday. All indications are that the growth rate will be above 15 per cent aided by a favourable base effect and pick up in the services sector.

While the Reserve Bank of India has estimated a 16.2 per cent economic growth for the April to June quarter of the current financial year, Crisil and the State Bank of India projected India’s GDP growth rate at 15.2 per cent and 15.7 per cent respectively. According to Barclays, India is expected to register a 16 per cent GDP growth rate in the first quarter. India Ratings and Icra have estimated a growth rate of 13.3 per cent and 13 per cent respectively.

RBI expects India’s growth rate for the full year to be 7.2 per cent. According to the International Monetary Fund, India will grow at 7.4 per cent in the current financial year.

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Meanwhile, India has indicated that it may even increase its oil imports from Russia. With economic activities in India now almost touching the pre-Covid levels, the country’s energy requirements have been steadily rising this year compared to last year. One of the major challenges for India is to maintain inflation rate at an acceptable level. In July headline inflation stood at 6.7 per cent, down from 7.01 per cent in June.

India’s manufacturing activities are also picking up. Recording the strongest growth since last November, the S&P Global India Manufacturing Purchasing Managers’ Index (PMI) rose to 56.4 in July from 53.9 in June. “Output expanded at the fastest pace since last November, a trend that was matched by the more forward-looking indicator new orders,” S&P Global Market Intelligence’s economics associate director Pollyanna De Lima said.

However, unemployment remains an area that needs to be addressed.