Indian budget

India’s GDP growth of 7.8% fails to reach central bank’s estimate

India’s GDP hit 7.8% for the first quarter (April-June) of the current fiscal, a big drop on 13.1% GDP growth for the corresponding period of last year, according to the latest data from the government.

However, the figure is an improvement on 6.1% growth recorded in the January-March period of 2022-23.

Many activities, including agriculture, mining, manufacturing, electricity, construction, hotel, and transport, showed a decline in the first quarter of 2023-24 against the first quarter of 2022-23, the data showed.

According to RBI’s monetary policy committee (MPC), the real GDP growth for the first quarter of 2023-24 was projected at 8%. The GDP growth recorded for the first quarter of the current fiscal though is even lesser than RBI’s estimate.

Vivek Kumar, an economist at Quanteco Research, commented: “Acceleration in India’s GDP growth in Q1FY24 is along expected lines. This was single-handedly driven by recovery in private consumption, even as other demand side drivers showed moderation. Meanwhile, reflecting a slowdown in global trade, exports contracted on annualized basis for the first time in 10 quarters.

“On the supply side, services continue to outpace industry performance with strong traction in contact-intensive activities along with finance and real estate services.”

He added: “While this is comforting, we do believe Q1 would mark the peak in near term growth trajectory, with successive quarterly numbers printing lower. We maintain our FY24 GDP growth to moderate to 6% from 7.2% in FY23 on account of lagged impact of past monetary tightening, adverse spill over from the global slowdown, uncertainty related to monsoon performance, and waning of pent-up demand.”

SMEs ‘key to allowing India-US trade to reach new heights’

Business representatives have stressed the important role SMEs have to play in improving trade between India and the United States.

Speaking at a meeting between business leaders from the two countries, organised by the Confederation of Indian Industry (CII) and the US-India Business Council (USIBC), United States Trade Representative (USTR) Katherine Tai said: “The U.S.–India trade relationship continues to grow in breadth, depth, and importance. Resolving the challenges that small businesses face will be key to allowing our partnership to reach new heights. I look forward to hearing from stakeholders on the role our governments can play in democratizing economic opportunity for entrepreneurs in both of our countries.”

Also speaking at the ‘US-India Trade Partnership: Delivering Economic Prosperity’ symposium, Chandrajit Banerjee, Director General, CII, said: “Supporting SME engagement – whether it is in standards cooperation, sustainable trade, funding and scaling, or integration in global supply chains – is the next logical step in further fortifying the dynamic trade ties between the United States and India.

“The next wave of inclusive economic growth and employment generation is sure to come from the SME sector and we must enable our small companies in both countries to connect and explore further opportunities,” he said.

At the meeting CII President R Dinesh suggested pathways to further enhance India-US trade “by making trade seamless and sustainable, investing in supply chains and harmonizing standards, and providing regulatory stability, which are critical factors for companies, whether they are large or small”.

And USIBC President Atul Keshap added that trade ties between the U.S. and India are robust, with SMEs playing a pivotal role. He said: “These enterprises can help us reach our goal of $500 billion in annual trade, and serve as vital engines for employment, value augmentation, and innovation within the bilateral dynamic. I am happy to see the U.S. and Indian governments work collaboratively to help SMEs amplifying their impact, facilitate their global market entry, and strengthening enhanced knowledge networks.”

The trade relationship between the United States and India has grown in recent years, with trade volume surpassing $190 billion in goods and services in 2022.

In a statement on its website CII said: “The discussion provided a unique platform for high-level discussions on pressing trade matters and delved into a range of issues, including current trade challenges, addressing tariff and non-tariff barriers, enhancing trade facilitation, fostering developments in cleantech and sustainable finance, unlocking opportunities in the realm of digital trade, and promoting deeper integration within global supply chains.

“Of particular importance is the shared commitment to championing resilient, sustainable, and inclusive trade practices and the focus on integration of SMEs in both nations, highlighting avenues for cooperation that will empower these critical economic drivers and facilitate their participation in the global marketplace.”