India’s Gross Domestic Product (GDP) grew by 13.5% in Q1. Although below the Reserve Bank of India’s (RBI) projected 16.2%, it is an impressive fillip from the previous quarter. From January to March (Q4 of FY2021-22), the economy grew by 4.1%. However, growth figures for the same quarter in the last fiscal year was an almighty 20.1%, but it came against the low base of FY 2020-21 when covid 19 wreaked havoc on the economy. The service sector’s contribution was highest, growing at 17.8%. Industrial growth stood at +8.6%, while agriculture grew by 4.5%.

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While the double-digit growth rate is impressive, it is unlikely to be sustained over the year. One of the most common-sensical triggers for the rapid rise has been the reopening of the economy. As the initial spike plateaus, growth figures will revert to base levels, a trend that is already noticeable to a few experts:

“We are seeing signs of waning of the intensity of tailwind generated by economic reopening. Add rising borrowing cost to benign consumption prospects, and business investment could be potentially underwhelming,” says Kunal Kundu, an economist at Societe Generale GSC Pvt.

Another factor, argues a BBC analyst, is that Q1 coincided with the festive season in India. Consumer spending is usually high during this period, perhaps accounting for the 26% rise in private consumption. With fears of an impending global recession due to multiple factors: the United States diminished consumer spending power, the energy crisis precipitating across Europe and likely to get worse over winter, the Chinese property crisis and Covid-imposed lockdowns, etc.- expectations from the coming months are moderate.

Also Read: India’s GDP Quarter 1 numbers: Sector-wise performance

Further, climate-induced stresses such as uneven rainfall, heatwaves, etc. are likely to affect farm outputs, dampening forecasts for the coming months:

“Exogenous forces will act as counterweights, including impact of the heatwave on farm output followed by uneven start to the monsoon, sharp rise in commodity prices impinging on corporate margins and an uncertain global environment,” argues Radhika Rao, an economist at DBS Bank.

The RBI has predicted an overall growth rate of 8.7% for FY22-23. It marks a robust return after the economy contracted by 6.6-7.2% during the pandemic period.