India's gross domestic product grew 6.1% in January-March, up from 4.5% in the previous quarter, showing the country's economic recovery from the pandemic remains on track.
The result for the fourth quarter of the fiscal year that ended March 31 brought annual expansion to 7.2%, compared with 9.1% for the preceding year.
The quarterly result came in above the 5% growth predicted in a Reuters poll of 56 economists conducted in mid-May. In the same quarter of the previous year, the South Asian nation's economy grew 4%.
Inflation has eased and the stage is set for further growth, according to Indian institutions.
"Risks to inflation have moderated, with downward corrections in global commodity and food prices and easing of the pass-through from high input cost pressures of last year," the Reserve Bank of India said in its annual report released on Tuesday, just ahead of the GDP data. It added that the cumulative increase in the policy repo rate by 250 basis points over the last financial year to 6.5% "would steer the disinflationary process, along with supply side measures to address transient demand-supply mismatch due to food and energy shocks."
India's retail inflation fell to an 18-month low of 4.7% in April from 5.66% in the previous month, remaining within the RBI's tolerance band of 2% to 6% for the second consecutive month.
For the ongoing financial year, the central bank projects GDP growth of 6.5%.
Amid global uncertainties, a research report by the government-run State Bank of India on May 26 said domestic consumption and investment in the country stand to benefit from "stronger prospects for agricultural and allied activities, strengthening business and consumer confidence, and strong credit growth." It pointed out that this year's budget focus on capital expenditure is likely to spur private investment, boost job creation and demand, and raise India's potential growth.
Prime Minister Narendra Modi's government in February announced a major boost for infrastructure spending in its last full budget before the 2024 general election. It said the government's capital investment outlay for the ongoing financial year would rise for the third year in a row, with a sharp 33% increase to 10 trillion rupees ($122 billion). That is equivalent to about 3.3% of gross domestic product, Nikkei Asia reports.
