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India’s economy grows by 13.5 per cent but misses target

The jump came from the previous quarter’s low base and economists warned of a slowdown.

India’s economy grew 13.5 percent in the April-June quarter from a year earlier, the fastest pace in a year, amid concerns that growth will slow sharply this quarter and workers ahead as higher interest rates weigh on activity.

Official data released on Wednesday showed that the jump came on the back of boosting agriculture and manufacturing, while easing restrictions on the spread of the epidemic.

Economists polled by Reuters expected the gross domestic product of Asia’s third-largest economy to grow 15.2 percent on an annual basis in the April-June quarter, compared with 4.1 percent in the previous quarter.

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The apparent big jump in growth, which is lower than the 20.1 percent annual growth recorded in the same quarter last year, is due to the low base of the previous quarter and economists have warned that growth this quarter may be followed by a slowdown. .

“Going forward, with global headwinds, India’s offshore sector will have a difficult time,” Rajani Sinha, chief economist at CARE Ratings, said in a note emailed to Al Jazeera.

“It will be critical for consumption and domestic investment to gain momentum. The recovery of consumer demand has so far been uneven with weak rural demand. While lowering inflation will provide support for overall consumer spending, the erratic monsoon will play the role of spoiler for rural demand.

In July, the International Monetary Fund revised its growth forecast for India from 8.2% to 7.4% for the current fiscal year, which began in April.

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Despite the revision, India will remain among the world’s fastest growing major economies.

The double-digit growth in the April-June quarter comes at a time when the global economy is under pressure, with most countries facing high inflation. Prices rose as the Russian invasion of Ukraine continued, driving up energy and food prices.

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India’s economy was recovering from the pandemic-induced slump when an increase in Omicron-fueled coronavirus cases starting in January prompted authorities to reinstate some virus-related restrictions.

Multiple waves of COVID-19 outbreaks have hit India’s large informal sector hard, with unemployment rising to nearly 8.5% in August, according to data from a think tank, India’s economic watchdog.

India’s central bank expected inflation to reach 6.7 percent this fiscal year, and raised its key interest rate by 50 basis points to 5.4 percent, the third such increase since May.

The economy expanded 8.7 percent in the previous fiscal year after contracting 6.6 percent in the 2020-2021 fiscal year.

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