NEW DELHI, Aug 31 — India’s economy grew at a faster pace than expected in the April to June quarter, official data showed today, as buoyant domestic demand helped offset the impact of the Iran war.
Gross domestic product rose 7.8 per cent in the three months through June from the same period a year earlier, helped by a robust services sector, according to data from the statistics ministry.
While this was down from a revised 8.6 per cent recorded in the previous quarter, it was still above market expectations of 7.3 per cent growth.
India’s economy “has sustained growth momentum despite global headwinds”, the statistics ministry said in a statement.
Monday’s reading cements India as the world’s fastest growing major economy, and will be welcome news for Prime Minister Narendra Modi’s government, which has been grappling with political setbacks and a series of delicate policy challenges.
The year kicked off on a strong note for India, with robust economic growth and progress on a much-delayed interim trade deal with the United States.
That momentum, however, quickly stalled with a stalemate in talks with Washington. The Iran war has also raised energy costs as well as India’s import bill, stoking inflation.
New Delhi depends heavily on imports for its oil and gas needs, making it particularly vulnerable to the global energy shock caused by the conflict.
Initial assessments of the Mideast turmoil prompted India’s central bank to cut growth projections for the current fiscal year. The projections were later revised upwards.
The Indian government has so far shielded citizens from the worst of the war’s economic impact with limited and staggered fuel price hikes.
But analysts warn that this may not hold given renewed tensions in the Mideast and consistently elevated global crude prices.
Sweeping consumption and income tax cuts last year have also helped boost domestic demand and protected India’s economy from geopolitical tensions, including US President Donald Trump’s tariff blitz. — AFP
