Domestic demand buoys GDP more in the first quarter

• India’s real gross domestic product (GDP) growth rose to 7.8% on-year in the first quarter of fiscal 2024, compared with 6.1% previous quarter. This was the second consecutive quarter of rising growth
• Higher growth was domestically driven, as private consumption accelerated, while investment growth remained high. Easing inflation in first quarter added to the purchasing power of consumers. Meanwhile, government’s focus on capital spending (capex) maintained the investment momentum. However, external demand was a drag that led to declining export growth
• Rising consumption seems to have benefited services the most, which saw highest growth among supply-side sectors. Manufacturing growth rose to a lesser extent, somewhat contratary to what the strong PMI and healthy corporate profits in the first quarter were indicating. Agriculture growth slowed a bit, reflecting delayed sowing due to deficient rains in June