India’s growth expected to slow in April-June quarter

India’s economic growth is expected to decrease in the April-June quarter, marking its slowest pace in a year. This was primarily due to reduced government spending during the national election that ended in June.

The growth rate, which had been consistently above seven per cent in previous quarters, was supported by robust capital expenditure by Prime Minister Narendra Modi’s government as it aimed to secure a third term in the election.

The median forecast predicts a 6.9 per cent annual growth rate for the April-June quarter, a decrease from the previous quarter’s 7.8 per cent, According to a recent poll of 52 economists conducted between August 19th and 26th.

Forecasts ranged from six per cent to 8.1 per cent. Official data for this quarter is set to be released by the government on Friday.

Economists attribute the slowdown to a significant decrease in public spending by both the central government and states, particularly on capital expenditure (capex).

Looking ahead, growth is expected to moderate further, averaging seven per cent for the current fiscal year (FY25) and 6.7 per cent for the next (FY26), unchanged from previous forecasts.

While economic growth in the previous quarter neared eight per cent, consumer spending, which accounts for over half of India’s GDP, grew at a much slower pace – roughly half the rate of overall growth.

Consumer price inflation reached 3.54 per cent in July and is expected to average around 4.5 per cent for both the current and next fiscal years.

Attribution: Reuters

Subediting: M. S. Salama