<\/p>\n
India\u2019s economy expanded faster than expected in the April-June quarter, easing fears that the Iran war would weaken growth and underscoring the resilience of Asia\u2019s third-largest economy.<\/p>\n
Gross domestic product grew 7.8% from a year earlier in the April-June quarter, beating the 7.3% median estimate in a Bloomberg survey and matching the previous quarter\u2019s pace.<\/p>\n
The RBI had forecast 7% growth for the quarter and expects 6.7% for the full year.<\/p>\n
Bonds held losses with the yield on the benchmark 10-year government paper up four basis points to 6.95%. The rupee closed 0.2% at 95.17 to a dollar before the data. Stocks had closed before the GDP release, with the NSE Nifty 50 Index down 0.4% at 24,080.40.<\/p>\n
Manufacturing and financial services helped drive growth, data showed. Manufacturing expanded 9.2% in the three months to June, up from 8.3% a year ago, while financial services grew 12.1%, compared with 8.8% in the year earlier period.<\/p>\n
The stronger performance reinforces the government\u2019s recent pitch to global investors that India can withstand external shocks. The South Asian nation has been particularly exposed to the closure of the Strait of Hormuz, a key route for oil shipments to a country that imports nearly 90% of its crude.<\/p>\n
India remains the world\u2019s fastest-growing major economy, but the pace falls short of the 9.25% annual growth the government estimates is needed to achieve Prime Minister Narendra Modi\u2019s goal of developed-nation status by 2047.<\/p>\n
HDFC Bank economist Sakshi Gupta raised her full-year growth forecast to 7% from 6.8% after the stronger-than-expected first-quarter expansion, citing robust consumption, government spending and investment. A broadly steady monsoon should also help limit risks to rural demand, she said.<\/p>\n
Stronger growth could complicate the outlook for interest rates. The RBI kept its benchmark rate unchanged at 5.25% in August, though policymakers have signaled that a hike may be needed later this year if inflationary pressures build.<\/p>\n
Investment strengthened sharply, with gross fixed capital formation rising 11.9% from a year earlier in the April-June quarter, up from 5.8% a year ago. Private consumption, which accounts for nearly 60% of the economy, grew 7.1%, compared with 6.8% a year earlier.<\/p>\n
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