India economic growth: India's economic growth is anticipated to have slipped below 7 per cent for the first time in the current fiscal year during the October-December period, primarily impacted by subdued performance in the manufacturing sector and weakening consumption.

According to a Reuters poll, India is projected to have grown at 6.6 per cent in the three months ending December 31, slowing from the 7.6 per cent growth recorded in the previous quarter and 7.8 per cent in the July quarter.

India is set to release the gross domestic product (GDP) data for the quarter, along with the revised estimate for the full fiscal year ending March 31, on Thursday.

Gaura Sen Gupta, an economist at IDFC First Bank, said that some moderation is expected in the October-December GDP growth, primarily due to softer growth in the manufacturing sector. Additionally, consumption growth in the quarter was described as ‘mixed’, with retailers reporting a slowdown in sales growth.

Earlier this month, market researcher NielsenIQ highlighted a sequential slowdown in sales volume growth in the Indian consumer goods sector during the December quarter.

Retailers, particularly in rural areas, have encountered challenges amidst a sluggish recovery from the COVID-19 pandemic, marked by high living costs and weak wage growth, despite India's resilient growth rate.

Major companies like Hindustan Unilever and Britannia Industries reported subdued quarterly profits, attributed to sluggish rural demand and heightened competition.

Fastest-growing economy

Despite the deceleration in growth, India is poised to maintain its status as one of the world's fastest-growing economies. The government's first advance estimate projects a growth rate of 7.3 per cent for the current fiscal year, amid a slowdown in China and the eurozone narrowly avoiding a technical recession.

Economists anticipate that India will sustain its position as one of the fastest-growing economies in the foreseeable future, buoyed by Prime Minister Narendra Modi's reform initiatives.

Kaushik Das, an economist at Deutsche Bank, emphasised the potential for long-term growth, projecting a minimum real GDP growth of 6 per cent to 6.5 per cent and nominal GDP growth of 10 per cent to 11 per cent over the next two decades, surpassing comparable emerging market countries.

Modi's administration has significantly increased government spending on infrastructure in recent years and introduced incentives to boost manufacturing of various products, aiming to enhance India's competitiveness vis-à-vis countries like Vietnam and Thailand in the global market.

(With Reuters inputs.)