New Delhi: India’s economic recovery strengthened in the July-September quarter on stronger consumer spending, though the emergence of the Omicron coronavirus variant has raised fears for the future.
Gross domestic product expanded 8.4% from a year earlier, the fastest pace among major economies, data from the Ministry of Statistics and Programme Implementation showed on Tuesday. That compared with a revised 7.4% contraction during the same period last year when the economy struggled under pandemic restrictions.
The reading was in line with 8.4% growth predicted by economists in a Reuters poll and compared with 20.1% year-on-year growth during the previous quarter.
Economists said the recovery was being helped by resilient farm sector growth and government spending, but that new COVID-19 variants, a global slowdown and rising manufacturing prices pose risks to growth.
The emergence of the Omicron coronavirus variant has led health authorities to tighten testing at Indian airports while Prime Minister Narendra Modi has ordered a review of plans to ease travel curbs.
The Reserve Bank of India (RBI), which expects 9.5% growth in the current fiscal year and 7.8% next fiscal year, has cut key interest rates to record lows and infused massive liquidity to support the economy.
RBI’s Monetary Policy Committee (MPC) will meet for a policy review from December 6-8 and is widely expected to speed up sucking out liquidity before normalising interest rates, as households express growing concern about inflation.
Asia’s third-largest economy has rebounded from last year’s deep slump, boosted by rising vaccination rates and stronger government spending, economists said.