Take a bow, this is grown-up GDP

When the going gets tough, it shouldn't get too tough to be enthusiastic. India pulled through a bruising quarter with its now customary sangfroid, delivering class-leading growth.

The 7.8% GDP print for the April-June quarter is well above the 7% forecast by RBI and sectoral performance was surprisingly robust. Agriculture put up a strong showing despite an erratic onset of the monsoon. Manufacturing powered ahead amid global supply chain uncertainty. And services were propped up by a surge in bank credit. Consumption defied the global energy shock and investment surprised on the upside.

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This broad outperformance should confound naysayers, particularly foreign investors, who saw India as extra vulnerable to the Hormuz blockade because of its dependence on oil imports from West Asia.

The growth resilience does affect the inflation outlook. Although within RBI's comfort zone, the gauge is ticking up, and the central bank will have to revisit its interest rate trajectory with a strong start to the year.

Growth impulses could weaken with crude oil persisting at $90 a barrel and inflation could quicken. Hawks are in the minority in RBI's interest rate-setting committee for now. But the evidence of overheating is becoming stronger. A rate hike seems distant. Yet, the central bank would not wish to be behind the curve after having faced public scrutiny over runaway inflation in the wake of another energy shock caused by the Ukraine conflict.

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Policymakers will take due credit for a macroeconomic crisis playbook that is delivering sequentially. India's growth ballast is its domestic consumption that is feeding off tax cuts and credit. Effects of fiscal stimulus will eventually run out and borrowing to consume is self-limiting.