India’s economy is expected to continue the growth momentum seen in 2023, driven by a rebound in private consumption and local demand. The Reserve Bank of India announced on Monday that inflation was better than expected in the final quarter of 2022/23, with the impact of net external demand easing in April-June 2023 if services exports maintain their recent high momentum. Investment activity is also expected to improve due to the drive towards capital.
India’s services exports rose 13.1% year-on-year to $30.48 billion in March, and service exports rose to $30.36 billion in April, according to provisional government figures. The RBI said domestic service sector activity continues to see a recovery in contact-intensive services and resilience in construction activity. Based on partial data available in April 2023, the Index of Economic Activity currently projects GDP growth, assuming an implicit GDP growth rate of 5.1% in Q4 2022/23.
The Reserve Bank of India announced that the inflation rate for the first quarter of 2023/24 is 7.6%. Data earlier this month showed India’s annual retail inflation slowed to 4.7% in April from 5.66% the previous month, with falling wheat prices, falling oil prices for five consecutive months, and falling egg prices for three months in a row being the causes. The decline in headline inflation is due to the combined effects of tighter monetary policy and supply.
India’s wholesale price-based inflation rate rose 1.34% in March, but fell 0.92% year-on-year. There is also the possibility of a pass-through of wholesale price volatility under deflation in April, the RBI said, which would contribute to a slowdown in retail inflation going forward.
Reported by Swati Bhat and compiled by Saumyadeb Chakrabarty, these economic updates showcase India’s continuing growth and improvement, despite ongoing challenges.