Growth in construction boosts India’s economy

Result will help Prime Minister Modi as he seeks third term in power

The nation is ranked among the best-performing
economies due to
domestic demand
and investment

Eastern Eye

INDIA’S economy grew 8.4 per cent in the December quarter, official data showed last Thursday (29), with a surging manufacturing sector helping defy more modest analyst forecasts.

Thursday’s results were significantly higher than the seven per cent 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 in the 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 that the GDP figures showed “the strength of the Indian economy and its potential” to help the country’s 1.4 billion people “lead a better life”.

His government has made the stewardship of the economy a core aspect of its election campaign.

The world’s most populous country is already among the best-performing economies, thanks to robust domestic demand and investment.

Last month, the government announced a double-digit boost to infrastructure spending, which finance minister Nirmala Sitharaman said would unlock five years of “unprecedented development”.

Figures from last Thursday’s GDP release showed 11.6 per cent growth in manufacturing, reversing sluggish demand in the sector seen through last year, while the construction sector grew by 9.5 per cent.

India lifted its full-year growth forecast to 7.6 per cent from 7.3 per cent for the 12 months to March 31.

Thursday’s data also revised its previous figures for the March and June 2023 quarters to above eight per cent.

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 per cent in the 2022-23 financial year, the second-highest among G20 countries.

The International Monetary Fund has 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 per cent since the Reserve Bank of India paused rate hikes last year. (AFP)