Q1 GDP print shows domestic momentum strong but global risks remain a concern: CEA Nageswaran

New Delhi, [India] August 31 (ANI): India's domestic economic momentum remains strong in the near term, but uncertainties over global interest rates, energy supplies and food prices could weigh on growth going forward, India's Chief Economic Advisor, V Anantha Nageswaran said on Monday. He said the economy had demonstrated considerable resilience despite geopolitical disruptions and external shocks, but warned that global developments could eventually have an impact on domestic activity.

According to the data release by the Ministry of Statistics & Programme Implementation on Monday, India's real GDP grew 7.8% year-on-year in the April-June quarter of FY27, The growth was higher than the 6.9% recorded in the year-ago quarter, but moderated from the 8.6% growth in the January-March quarter, marking a strong start to the new financial year despite the West Asia conflict and global uncertainties. The 7.8% expansion was also above the RBI's 7% projection.

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"The near term, the domestic economic momentum is very strong, but globally, we are continuing to see uncertainties," Nageswaran said, flagging concerns around interest rates, energy commodity supplies and food prices.

Nageswaran said manufacturing and services activity had performed well in the first quarter, while exports and investment had also shown encouraging momentum. Merchandise exports excluding oil, gold, gems and jewellery had grown briskly in the initial months of FY27, while private consumption had remained resilient. He also pointed to stronger bank credit growth and indications of a pickup in private-sector gross fixed capital formation.

The CEA said the rise in manufacturing exports amid a difficult global environment reflected the benefits of free trade agreements, export diversification and potentially improving competitiveness, innovation and productivity in the Indian manufacturing sector. "If that is the case, it augurs very well for output and employment growth in the coming quarters and years," he said.

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On agriculture, Nageswaran said the monsoon situation had turned out better than feared, with sowing activity only marginally below last year across several crops. This, he said, augured well for agricultural output growth, although the impact on the Rabi season would need to be monitored.

He also said inflation remained reasonably well behaved and within the central bank's target range, while fiscal risks had eased due to stronger GST collections, resource mobilisation and lower-than-feared commodity prices.

Nageswaran said the combination of strong domestic activity and export performance had delivered another quarter of robust growth, demonstrating the resilience built through India's macroeconomic structural reforms despite an uncertain global environment.