India’s GDP Grows 6.1% Amid Strong Domestic Demand
India reported GDP growth for the full fiscal year of 7.2% compared with the previous year. Photo: Indranil Aditya/Zuma Press By Vibhuti Agarwal and Shan Li May 31, 2023 8:44 am ET NEW DELHI—India’s economy grew 6.1% in the fourth quarter compared with the same period last year, as domestic demand for goods and services picked up and consumer confidence, while still lower than before the Covid-19 pandemic, continued to strengthen. The South Asian country also reported gross-domestic-product growth for the full fiscal year of 7.2% compared with the previous year. India’s central bank last month raised its growth forecast for the current fiscal year to 6.5% from 6.4%. Authorities have been working to combat elevated food prices that have
India reported GDP growth for the full fiscal year of 7.2% compared with the previous year.
Photo: Indranil Aditya/Zuma Press
NEW DELHI—India’s economy grew 6.1% in the fourth quarter compared with the same period last year, as domestic demand for goods and services picked up and consumer confidence, while still lower than before the Covid-19 pandemic, continued to strengthen.
The South Asian country also reported gross-domestic-product growth for the full fiscal year of 7.2% compared with the previous year. India’s central bank last month raised its growth forecast for the current fiscal year to 6.5% from 6.4%.
Authorities have been working to combat elevated food prices that have increased costs for households around the world since Russia’s invasion of Ukraine last year. Inflation eased in the January-to-March quarter to between 5.5% and 6.5%, after hitting 7.8% last April.
“Domestic demand in India is doing better than the rest of the world,” said Sujan Hajra, chief economist at Anand Rathi Securities in Mumbai. The reason, he said, was improved income growth and higher consumer spending.
Hajra said that since India, unlike other major economies, didn’t implement large-scale fiscal stimulus programs during the pandemic, it has avoided the negative impact from the withdrawal of those programs.
Many economists predict that India will continue to be one of the world’s fastest-growing economies, but creating jobs for its millions of unemployed people remains a major challenge.
The unemployment rate jumped to 8.1% in April, the fourth consecutive month of higher jobless rates, according to the Centre for Monitoring Indian Economy, an independent think tank in Mumbai. Prime Minister Narendra Modi is seeking to expand manufacturing jobs as global supply chains shift and companies diversify out of China.
“Its growth story will be determined on how well it can create such opportunities,” Hajra said.
Kavita Lama,
Now, clients are back, said Lama. She has raised prices for services like hair cuts, hair coloring and manicures three times in the past two months, she said.
“They don’t want to save anymore,” she said. “They are ready to spend more even if the services are getting costlier.”
A monthly survey by India’s central bank shows consumer confidence has improved. In March, 75% of those surveyed said they had boosted their spending, compared to 64.1% in the same month a year ago.
Sales of vehicles, which is a key indicator of consumer demand, have also grown. India’s total passenger-vehicle sales volume grew 17% in January, 11% in February and 4.7% in March from the same period a year ago, according to the Society of Indian Automobile Manufacturers.
Usha Goel, 64 years old, who lives in the northern city of Bareilly, said she has been spending more in recent months on groceries and household help, even with higher prices.
Last week, Goel hired a new helper for her home, adding a significant new expense. She and her husband, a retired professor who gets a monthly pension of around $970, eat out at least once every two weeks. They are planning to buy a car and hire a driver.
“We don’t want to compromise anymore,” she said. “We want to live a comfortable life.”
Write to Vibhuti Agarwal at [email protected] and Shan Li at [email protected]
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