Indian economy grew 8.4% in December quarter: Official data
World’s most populous country is already among the best-performing economies
NEW DELHI: India’s economy grew 8.4 percent in the December quarter, official data showed Thursday, with a surging manufacturing sector helping defy more modest analyst forecasts. The world’s most populous country is already among the best-performing economies thanks to robust domestic demand and investment.
Thursday’s results were significantly higher than the 7.0 percent projected by India’s central bank and other, lower estimates by analysts. “Double-digit growth in the manufacturing sector, followed by a good growth rate of construction sector” were responsible for the better-than-expected performance, India’s statistics agency said.
The result is a fillip to the already commanding position of Prime Minister Narendra Modi ahead of a national election due in the coming months, which he is widely expected to win. Modi said in a social media post the GDP figures showed “the strength of Indian economy and its potential” to help the country’s 1.4 billion people “lead a better life”.
His government has made stewardship of the economy a core aspect of its campaign, along with the ruling party’s muscular Hindu-nationalist ideological pitch to voters from India’s majority faith. Earlier this month it announced a double-digit boost to infrastructure spending which finance minister Nirmala Sitharaman said would unlock five years of “unprecedented development”. Figures from Thursday’s GDP release showed 11.6 percent growth in manufacturing, reversing sluggish demand in the sector seen through last year, while the construction sector grew by 9.5 percent.
India lifted its full-year growth forecast to 7.6 percent from 7.3 percent for the 12 months to March 31. Thursday’s data also revised its previous figures for the March and June 2023 quarters to above 8.0 percent. India emerged from the COVID-19 pandemic to be buffeted by a new set of global headwinds, including tightening financial conditions and the effects of the war in Ukraine on global food and oil markets.
Its economy nonetheless grew 7.2 percent in the 2022-23 financial year, the second-highest among G20 countries. The International Monetary Fund last month projected India’s growth to remain strong through the next financial year due to “resilience in domestic demand” even as it predicted a slowdown elsewhere in Asia.
Demand has rebounded and inflation has receded from its 2022 peak of 7.8 percent since the Reserve Bank of India paused rate hikes last year, with its key benchmark repo rate steady at 6.5 percent since. India overtook Britain in 2022 to become the world’s fifth-largest economy and last year surpassed China to become the most populous country.
Meanwhile, Mauritius inaugurated on Thursday an Indian-financed air strip and jetty on the island of Agalega, but denied the remote islet would be used for military purposes. An investigation by news broadcaster Al Jazeera in 2021 said India was building a secret naval base on Agalega, much to the chagrin of its approximately 300 inhabitants.
“There has never been a project to turn Agalega into a military base,” Mauritius Prime Minister Pravind Jugnauth said. “I strongly deplore and condemn the India-bashing campaign fomented by some people in Mauritius and abroad.”
The three kilometre (1.9-mile) air strip and jetty were agreed upon during Indian Prime Minister Narendra Modi’s 2015 visit to Mauritius and cost 8.8 billion mauritian rupees ($192 million).
Jugnauth said the infrastructures would help the Indian Ocean island modernise and strengthen its security. “They will strengthen the fight against drugs, human trafficking and illegal, unreported and unregulated fishing, and will enable emergency response,” he said, calling it a dream that had turned into reality.
An archipelago of four islands, Mauritius also includes Saint-Brandon and Rodrigues, which has had an autonomous status since 2001. The report of a naval base in Agalega raised fears of a repeat of the 1965 decision by Britain to separate the Chagos Islands from Mauritius and set up a joint military base with the United States on Diego Garcia, the largest of the isles.
The decades-old move has sparked protests by Chagossians, who accuse Britain of carrying out an “illegal occupation” and barring them from their homeland. Britain insists the islands belong to London and has renewed a lease agreement with the United States to use Diego Garcia until 2036.
Diego Garcia’s air and sea bases played a strategic role during the Cold War and during the war in Afghanistan.