More than satisfying

The GDP growth figure for Q1 was eagerly awaited for several reasons.

- MADAN SABNAVIS

First, in light of the tariff trauma inflicted by the US on India, this number was going to be important even though the decision has been implemented only in late August. Second, it will be a major lever for the Reserve Bank of India (RBI) when it takes a decision on the repo rate. The direction of policy has changed from inflation to growth in the past few policies and the 7.8% number definitely does not indicate any weakness. Third, given the final growth projection of around 6.5% for the year, it will provide a cushion to any downside in the coming quarters.

The performance has been more than satisfying as growth is broad-based in all the services segments, and two in the secondary sector grew at impressive rates. Agriculture has provided the expected support while mining and electricity have been the low performers, which was expected as the growth numbers mirror what was already known in the index of industrial production (IIP) numbers for this quarter. Hopes are high of a recovery in urban demand this festival season with the government also likely to take some affirmative steps.