India's economy grows 8.4% yoy in July-Sept quarter

[NEW DELHI] India's economic recovery strengthened in the July-September quarter on stronger consumer spending, though the emergence of the Omicron coronavirus variant has raised fears for the future.

Gross domestic product expanded 8.4 per cent from a year earlier, the fastest pace among major economies, statistics ministry data showed on Tuesday. That compared with a revised 7.4 per cent contraction during the same period last year when the economy struggled under pandemic restrictions.

The reading was in line with 8.4 per cent growth predicted by economists in a Reuters poll and compared with 20.1 per cent year-on-year growth during the previous quarter.

Economists said the recovery was being helped by resilient farm sector growth and government spending, but that new Covid-19 variants, a global slowdown and rising manufacturing prices pose risks to growth.

The emergence of the Omicron variant has led health authorities to tighten testing at Indian airports while Prime Minister Narendra Modi has ordered a review of plans to ease travel curbs.

The Reserve Bank of India (RBI), which expects 9.5 per cent growth in the current fiscal year and 7.8 per cent next fiscal year, has cut key interest rates to record lows and infused massive liquidity to support the economy.

RBI's Monetary Policy Committee (MPC) will meet for a policy review from Dec 6-8 and is widely expected to speed up sucking out liquidity before normalising interest rates, as households express growing concern about inflation.

Asia's third-largest economy has rebounded from last year's deep slump, boosted by rising vaccination rates and stronger government spending, economists said.

REUTERS