India's Economic Growth Slows to 6.7% in Q1, Still World's Fastest-Growing Economy
India's economic growth slowed to 6.7% year-on-year in the April-June quarter, falling short of expectations but remaining the fastest-growing major economy globally. The decline was attributed to reduced government spending during national elections. However, experts believe the slowdown is temporary, with easing inflation and increased government spending expected to boost growth in the coming months.
V. Anantha Nageswaran, India's chief economic adviser, remains optimistic about the country's growth prospects, citing strong investment demand and positive business sentiments. He believes that sustained structural reforms could enable India to achieve a sustainable growth rate of 7% or higher.
Prime Minister Narendra Modi has implemented various measures to stimulate the economy following recent elections. Despite softer-than-expected GDP numbers, the Gross Value Added (GVA) - a more stable measure of growth - increased by 6.8% in the April-June quarter. Consumer spending and capital investments also saw significant growth during this period.
However, challenges remain, particularly in job creation and inclusive economic growth. Real wages, household consumption among lower-income groups, and private investments have been affected. The government has ramped up spending to spur economic activity, with a focus on infrastructure development.
Looking ahead, economists anticipate a potential cut in the central bank's policy rate later this year, driven by easing retail inflation. This could further boost household consumption and support private investments. Overall, while India's growth trajectory remains strong, addressing key challenges will be crucial for achieving sustainable and inclusive economic development.