Indian economy is expected to continue
its strong growth in the quarter to end of September, boosted by a solid urban
consumption and government spending, outpacing a slowing global economy
squeezed by elevated interest rates and higher energy prices.
Asia’s third-largest economy is estimated
to grow at 6.8 per cent in the July-September quarter compared with a year
earlier, stated a poll by Reuters. Bharat will release the quarterly gross
domestic product figures at 1200 GMT on Thursday.
Bharat is seen as the bright spot
globally as some Western countries are flirting with the possibility of
recession, while China, the world’s second-largest economy, has slowed down.
The poll’s consensus forecast is higher
than Reserve Bank of India’s projection of 6.5 per cent for the quarter, but
lower than the 7.8 per cent growth Bharat’s economy saw in the previous
quarter, helped by the comparison with a low base the previous year.
“Domestic demand remains the key
economic driver of activity, as external demand continues to remain weak,” said
Barclays economist Rahul Bajoria, adding services and construction sectors have
shown robust growth.
Private consumption accounts for nearly
60 per cent of the Indian economy.
During the quarter, urban consumption
indicators such as passenger vehicle sales rose over 38 per cent and domestic
passenger aviation traffic growth exceeded 20 per cent through the three
months.
Record online sales of e-commerce
players such as Amazon and Walmart owned Flipkart during the country’s festival
season was another evidence of strong consumption in urban centres.
The Indian economy showed good momentum,
said Bharat’s Economic Affairs Secretary Ajay Seth, who expected “good numbers”
for the September quarter.
The Indian Government spent 49 per cent
of its capital expenditure budget of 10 trillion rupees ($120.01 billion)
between April and September, compared with over 45 per cent of 7.5 trillion
rupees in the same period last year.
“We had expected government capex
spending and the real estate sector to drive growth and, indeed, both factors
have crucially underpinned a construction cycle which has been a key ingredient
of growth this year,” JP Morgan’s Sajjid Z Chinoy said in a note.
Rural demand, particularly across the
farm sector hit by weather vagaries that delayed sowing activity, remained a
key concern, said economists.
They noted how two-wheeler sales, a good
indicator of rural buying power, rose 13 per cent during the July-September quarter,
far less than passenger vehicle sales.
“Some anticipated spending in rural
areas that happens due to harvesting may be delayed this time because of uneven
monsoons impacting consumption,” said Sunil Kumar Sinha, an economist at India
Ratings.
Reuters
