India’s economy rises faster-than-expected 7.4% last quarter

[NEW DELHI] India’s economy grew at a faster pace than analysts expected last quarter, driven by some pick up agricultural activity and investments. 

Gross domestic product rose 7.4 per cent in the three months to March from a year earlier, the Statistics Ministry said on Friday (May 30), above the 6.8 per cent forecast by economists in a Bloomberg survey. For the fiscal year ended March, the economy expanded 6.5 per cent.

The yield on the 10-year bond rose 2 basis points to 6.27 per cent after the GDP numbers were declared. 

While India retains its title as the world’s fastest-growing major economy, the annual growth rate marks a notable slowdown from the 8 per cent average seen in recent years – the pace needed by Prime Minister Narendra Modi to achieve his ambitious goal of making the country a developed nation by 2047.

To spur the economy, the Reserve Bank of India cut interest rates by 50 basis points over its last two policy meetings. The central bank is expected to ease further in its next meet on June 6. 

A higher-than-expected growth indicates that the economy has recovered from the slowdown seen in the middle of last year, said Sakshi Gupta, an economist at HDFC Bank. “Given global headwinds, the central bank is expected to remain growth supportive” and cut rates by a quarter-point at its next meeting, she said. BLOOMBERG