CEA warns the easy part maybe over for India’s GDP

Chief Economic Adviser V Anantha Nageswaran warned on Wednesday that the remainder of India's fiscal year would be tough, as surging oil prices, escalating interest rates, and heightened global growth uncertainties created a difficult external climate for the country, according to a PTI report. However, Nageswaran defended the economy's 7.8% growth in the April-June quarter, emphasizing that the figure was supported by reliable data and ongoing momentum in key indicators like GST collections, credit growth, and exports.

He stated that July-August data indicated a GDP growth rate of approximately 7.3%. Nageswaran noted that the upcoming half-year would present significant challenges due to the impact of higher energy costs. He highlighted that India's fuel landed cost reached $117 per barrel in September, up from the $80-85 range during June-August. This surge in oil expenses added to the uncertainty surrounding the growth outlook, even as domestic economic momentum remained robust.

Nageswaran clarified that the 7.8% GDP growth recorded in the first quarter of FY27 was not an illusion, despite criticisms that it did not fully capture the economic situation. He cited GST collections, credit growth, and export figures from July and August as evidence of sustained momentum. PTI quoted him as saying these indicators pointed to a robust first-quarter GDP reading.

He acknowledged that revisions to GDP calculation methods, such as the double-deflation approach, might have contributed around 30-40 basis points to the headline growth rate due to sharp increases in import prices. The 7.8% Q1 growth surpassed the Reserve Bank of India's 7% forecast for the quarter.