India’s strong economic growth impresses amid doubts on ‘overstated’ data

The better-than-expected growth of India’s economy, driven by strong performance in the domestic consumer and manufacturing sectors, highlights its near-term resilience despite a slowdown in exports and US import tariffs.

While India’s 8.2 per cent year-on-year growth figure in the July to September quarter was the fastest among major economies, analysts warn that the headline numbers may not provide a true picture of the challenges it faces.

Private consumer spending, which accounts for more than half of India’s gross domestic product, rose 7 per cent, fuelled by low inflation, according to official data released on Friday. Manufacturing output increased by 9.1 per cent over the same period.

The rosy picture on the domestic front was in stark contrast to India’s external trade outlook. The country’s merchandise exports fell by 11.8 per cent to US$34.4 billion in October. Shipments to the US declined by 8.5 per cent – a second straight month of contraction.

In response to the slowdown in its exports, India has been stepping up diversification into new markets.

N.R. Bhanumurthy, director of Chennai-based Madras School of Economics, said the visit by Russian President Vladimir Putin to New Delhi this week was a “clear signal” that India was prioritising trade diversification.