The slowdown was sharper than analysts had anticipated. However the lowered fee nonetheless locations India forward of China — which grew at 6.5% over the identical interval — because the world’s fastest-growing main economic system.
India’s financial efficiency is being carefully watched as subsequent yr’s basic election looms into view. Prime Minister Narendra Modi received workplace in 2014 after a marketing campaign through which he promised to spice up India’s economic system and create thousands and thousands of jobs.
Shilan Shah, an economist at Capital Economics, cautioned that India’s GDP statistics are usually not all the time essentially the most dependable. However he mentioned latest information on industrial manufacturing and autos gross sales additionally indicated weaker progress.
Nonetheless, the torrid tempo of growth within the earlier quarter would have been tough to take care of. Shah mentioned he expects progress to stay at wholesome ranges.
“The economic system ought to proceed to broaden quickly over the approaching months, supported by looser fiscal coverage forward of subsequent yr’s basic election,” he mentioned.
Pranjul Bhandari, chief India economist at HSBC, mentioned that progress was more likely to stay above 7% for the following few quarters, a tempo that may be sustained “with out stoking macroeconomic instability.”
A number of the largest pressures on the Indian economic system have eased in latest weeks.
Shah mentioned that India’s central financial institution, which held off on elevating rates of interest final month after two hikes earlier this yr, will seemingly preserve them unchanged once more when it meets subsequent week.