Finance Ministry sees Jul-Sept growth at 7.35%; crude oil prices pose risks to input costs

The Indian economy is projected to expand by 7.35% in the July-September quarter, according to the Ministry of Finance's October Monthly Economic Review. This growth figure represents a slight decline from the 7.8% expansion observed in the April-June period. The Ministry emphasizes that domestic demand, investment activity, a strong financial sector, and supply-side management have collectively contributed to the country's economic resilience.

However, the Ministry acknowledges that sustaining economic activity while maintaining price stability will be a key focus for policymakers during the remainder of the year. The higher price of crude oil and other energy-related challenges are impacting input costs, which may pose risks to economic growth. Despite these risks, several global agencies, including the International Monetary Fund (IMF) and the Reserve Bank of India (RBI), have increased their growth forecasts for India, citing stronger-than-expected domestic demand and robust services activity.

The Ministry expects GDP growth data for the second quarter to be officially released by the Ministry of Statistics and Programme Implementation (MoSPI) on November 30. Recent developments such as increased industrial output, manufacturing growth, and policy reforms in the Goods and Services Tax (GST) system are expected to contribute to continued growth.

However, challenges remain, particularly around elevated energy prices, supply-chain pressures, and geopolitical developments that could continue to impact manufacturing costs and investment decisions.