Construction workers work on a high-rise building in Kolkata on July 23, 2024.
Dibyangshu Sarkar | AFP | fake images
India’s economy grew at a faster-than-expected pace: 7.8% in the quarter ending in December.
A Reuters poll of economists had forecast gross domestic product from October to December to grow 7.2%.
The latest impression comes after the government revised the framework for calculating economic output to improve accuracy.
In the previous quarter, India’s GDP growth rate was 8.2%, which was revised to 8.4% in the new series. The GDP growth estimate for fiscal 2026 was also raised to 7.6% from 7.4% previously.
“The GDP data beat our and consensus expectations,” said Alexandra Hermann, chief economist at Oxford Economics.
In January, India’s Ministry of Statistics and Program Implementation (MoSPI) introduced changes to GDP, inflation and industrial production data series to strengthen data quality, credibility and policy relevance, it said in a statement.
As part of the framework changes, the world’s fastest-growing economy will move the base year of gross domestic product to the financial year 2023 from 2012.
The improved capture of faster-growing segments of the economy suggests that “the measured growth trajectory is likely to be structurally higher under the new series,” Hermann said.
Both private consumption and gross fixed capital formation grew at a growth rate of over 7.0% in the current financial year.
“The manufacturing sector has been the main driver contributing to the resilient performance of the economy in three consecutive financial years after restructuring,” MoSPI said in the statement.
In a report last year, the International Monetary Fund raised concerns about the accuracy of the Indian government’s economic data and assigned it a “grade C” rating, its second-lowest rating.
The government data has limitations, such as the use of “an outdated base year (2011/12)” and the use of wholesale price indices and one-time deflation to calculate inflation, all of which can distort real economic measures, the IMF said in its report.
“The new GDP series will largely address the IMF’s concerns and as a result, we expect its assessment and rating of India’s national accounts data to change,” MoSPI Secretary Saurabh Garg said in an interview with local media on Thursday.
Internal consumption, rates.
During the December quarter, the Indian economy saw a selective pick-up in domestic consumption of gold and automobiles due to the festive season. However, this was also the first full quarter in which Indian exporters felt the brunt of the US’s 50% tariffs.
Indian exports to the United States have faced such tariffs since August last year, but the two countries have now agreed to an interim trade deal that reduced tariffs to 18%.
However, the situation has become even more complicated after the US Supreme Court last Friday banned much of President Donald Trump’s tariff regime. Washington is now imposing a global tariff rate of 10% and has threatened to increase it.
The economic study released last month noted that India’s economic growth has not been hampered by slowing exports to the United States.
Textiles, marine products, gems and jewellery, automobile components and leather goods are India’s key exports, which have been hit due to US tariffs. But according to data shared by the Indian government, these products have found alternative markets.
