The Indian
economy grew by a record 13.5% in the first quarter of the 2022-23 financial year.
This was a major jump from the meagre 4.1% increase in the last quarter. That
Asia’s third-largest economy could post double-digit growth shows the extent of
recovery from the COVID-19 pandemic. A Reuter’s estimate had predicted a 15.2%
increase in India GDP this quarter. The real numbers fell short by around two
percentage points.

Here are
five reasons why India GDP could post double-digit growth:

Rebound in
private consumption: A
rebound in private consumption has perhaps been the biggest ways in which the
Indian economy has received a fillip. The favourable base effect coupled with
the end of pandemic restrictions has played a significant role. Private
consumption witnessed a growth of around 26%.

Softening
of crude and edible oil prices: The softening of crude oil and edible oil prices have enabled the Indian
economy to grow the way it has. Excise duty cuts and fiscal-side measures
enabled such softening. On the other hand, businesses have improved capacity as
domestic demand recovered.

Also Read | India GDP grows 13.5% in first quarter of 2022-23 fiscal

Monetary
policy: India’s Monetary
Policy Committee has started a rate-hike cycle and has already raised rates by
140 basis points since May, including 50 basis points early August to tame
inflation. The Reserve Bank of India (RBI) is expected to further raise the
repo rate.

In the first
quarter of the 2021-22 financial year, India’s GDP grew by 20.1%. However, the
growth reading was magnified owing to the economic contraction of 23.8% in the
first quarter of the previous year owing to the outbreak of the COVID-19
pandemic.

Also Read | Fiscal deficit touches 20.5 pc of annual target in Apr-Jul: Official data

India’s
first quarter growth rate is in sharp contrast to China which has barely avoided
a contraction. This is because China closed down much of its economy owing to
adhere to its zero-COVID policy.