Demand revived in consumption, whose share climbed 5.9 percentage points to reach 59.9% of GDP, while investment demand rose by a more modest 1.9 percentage points to 34.7%. Exports held their share, but elevated energy prices swelled imports, which gained 5.3 percentage points. Government expenditure declined in terms of GDP share, which points to tighter control also reflecting in the fiscal deficit numbers.
This is the Daily Edit from the economic times. It's September 1, and we put the focus on the economy with GDP growing 13.5 percentage, what should policymakers do next? The economic growth 13.5 percentage in quarter 120 2220 23, considerably slower than the Reserve Bank of India's forecast of 16.2. percentage growth was driven by contact intensive services, which faced COVID restrictions in the same quarter a year ago, and stepped up government capex agriculture surprised on the upside, growing twice as fast as a year ago, despite an intense summer that was expected to hurt yields. Manufacturing snapped out of a contraction in the previous three months demand revived in consumption, whose share climbed 5.9 percentage points to reach 59.9 percentage of GDP, while investment demand rose by a more modest 1.9 percentage points to 34.7 percentage exports held their share but elevated energy prices swelled imports, which gained 5.3 percentage points, government expenditure declined in terms of GDP share, which points to tighter control also reflecting in the fiscal deficit numbers, this is the last quarter during which the beneficial low base effect on account of last year's lock downs will be available. RBI expects GDP growth to decelerate sharply to 6.2 percentage in the current quarter and further to 4.1 percentage and four percentage in the subsequent ones. downside risks to its growth projection have materialized in the first quarter, which is likely to influence its interest rate trajectory inflation to is trending below forecast, although at 7.1 percentage projected for the current quarter. It remains well beyond the RBI tolerance level Shaktikanta Das anticipates a two year pathway for retail inflation to reach the target. Four percentage higher borrowing costs will affect both consumption and investment demand, especially the latter as the tap tightens on cheap international credit. As long as oil prices remain elevated demand revival will be dampened by imports. policymaking should now be informed by the prospect of a protracted phase of high interest rates. As the economy slows fiscal headroom has been squeezed by higher energy prices and elevated government debt levels gradual monetary tightening, though risks allowing inflation to become entrenched as demand recovers.
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