Key facts
- India's economy grew 7.8% year-on-year in the April-June quarter.
- This growth rate exceeded economists' forecasts of 7.1%.
- The manufacturing sector expanded by 9.2% and financial services by 12.1%.
- Private consumption rose 7.1% and investment grew nearly 12%.
- Credit growth reached its highest level in over a decade.
India's economy grew 7.8% year-on-year in the April-June quarter, surpassing economists' expectations and marking a five-quarter high. The expansion was fueled by a surge in investment and manufacturing activity, which offset weakness in mining and consumer-facing services. The government has implemented various economic measures and benefited from consumption tax cuts.
Government data showed that gross value added, a measure of underlying economic activity, increased by 8.2% during the period. The manufacturing sector grew by 9.2% compared to 8.3% in the same period last year, while the financial services sector saw robust growth of 12.1% from 8.8% a year ago, driven by strong bank credit growth. Personal consumption, an indicator of consumer spending, rose 7.1%, and investment grew by nearly 12%. Credit growth across sectors remained healthy, reaching its highest level in over a decade at the end of the June quarter. Despite these positive figures, economists noted that the ongoing Middle East conflict might be deterring companies from expanding capacity.