A Reuters report has indicated that India’s economy is likely to grow 7.6% in the April-June quarter. The poll results suggested that domestic demand was strong, driven primarily by manufacturing activity that remained solid despite elevated oil prices and a weakening Indian rupee.
Economist and market strategist at Continuum Economics, Charu Chanana said: “India is a domestic-driven economy – so a recovery in private consumption can outweigh external headwinds.”
Last year, during the April-June quarter, India reported a relatively weak annual growth of 5.6%, as manufacturing activity contracted.
According to Reuters, the Indian economy was hit by the November 2016 government decision to withdraw over 80% of cash.
The transition to a national goods and services tax, effective in July 2017 also impacted the economy.
According to Chief economist at Yes Bank, Shubhada Rao, India is now seeing good momentum in manufacturing.
Rao added that the corporate results for April-June quarter have corroborated the improving demand conditions in the economy.
“Corporate earnings data, the PMIs have corroborated the expansion and the recovery story,” Rao added.
Few economists are expecting a slight slowdown in growth due to greater global economic uncertainty and domestic political risks from national elections scheduled for May 2019.