NEW DELHI, Aug 31 (Reuters) – India’s economy grew 7.8% in the April-June quarter, government data showed on Monday, comfortably beating expectations as a surge in investment and manufacturing activity offset weakness in mining and consumer-facing services.
The figure was higher than economists’ expectations of 7.1% year-on-year growth in a Reuters poll, but slower than the revised 8.6% growth in the previous three months.
The Reserve Bank of India had projected first-quarter growth at 7%.
While goods and services tax cuts and income tax reductions have boosted consumer demand in Asia’s third-largest economy, economists believe that the six-month-long Middle East conflict is keeping companies from investing more in capacity expansion.
Still, credit growth across sectors including farm, industry and services remained healthy, according to the RBI’s August bulletin, with the highest loan growth of 18.3% in over a decade at the end of the June quarter.
Gross value added, a more accurate measure of underlying economic activity, grew 8.2% during the April-June quarter, the data showed. This measure strips out the volatile components of national accounts such as indirect taxes and subsidies.
The manufacturing sector grew at 9.2% compared with 8.3% in the same period last year, while the financial services sector grew a robust 12.1% compared to 8.8%, driven by strong growth in bank credit.
Personal consumption, an indicator of consumption in the economy, rose 7.1% while investment grew nearly 12%.
(Reporting by Shubham Batra in New Delhi; Editing by Mrigank Dhaniwala)
