India outperforms other major economies even as growth slows in April-June

India’s economic growth slowed to 6.7% year-on-year in the April-June quarter as a decline in government spending during national elections weighed, data showed on Friday, but it remained the world’s fastest-growing major economy. The rise in gross domestic product was less than a 6.9% expansion forecast by a Reuters poll, and compared to 7.8% growth in the previous quarter. Still, it was faster than 4.7% growth in China, Asia’s biggest economy, in April-June, and India’s slowdown is expected to be temporary as economists forecast that easing inflation and a pickup in government spending will shore up growth in the coming months. V. Anantha Nageswaran, India’s chief economic advisor, said growth momentum remained strong backed up strong investment demand and upbeat business sentiments. “In the medium term, the Indian economy can grow at a rate of 7% plus on a sustainable basis if we can build on the structural reforms undertaken over the last decade,” he told reporters after the release of data. Prime Minister Narendra Modi has taken several steps to boost the economy since recent national elections, in which his Bharatiya Janata Party failed to win an outright majority and is having to rely on allies to run the government for the first time in a decade. The Gross Value Added, seen by economists as a more stable measure of growth, increased by 6.8% in April-June from a year earlier, compared to 6.3% in the previous quarter. Upasna Bhardwaj, chief economist at Mumbai-based Kotak Mahindra Bank, said the GDP numbers were softer than expectations but the GVA remained firm with non-farm growth holding up. “We retain our GDP growth expectations of 6.9% in 2024/25, aided largely by rural demand and government spending while watching closely the likely fatigue in urban demand, private capex and pace of global slowdown,” she said. Consumer spending, which constitutes about 60% of GDP, rose to a seven-quarter high of 7.4% in April-June from a year earlier, compared to 4% in the previous quarter. Capital investments also rose by 7.4% compared to 6.5% in the previous quarter.