India's economy demonstrated a robust performance with its third-quarter GDP growth reaching 7.6%, surpassing the Reserve Bank of India's (RBI) forecast of 6.5%. This unexpected upswing led financial giants Barclays Plc and Citigroup Inc (NYSE:C). to adjust their fiscal year growth projections for the country to 6.7%. The data, released on Thursday, underscored the nation's resilience as the fastest-growing major economy, even against a backdrop of a global slowdown and a series of six interest rate hikes by the RBI.
The economic surge is mainly attributed to strong manufacturing and construction sectors, bolstered by the government's heavy investment in infrastructure and incentives for companies to establish operations domestically. These measures are part of Prime Minister Narendra Modi's strategy as the country prepares for upcoming elections, aiming to sustain economic momentum and job creation.
Investments in India showed significant strength, with gross fixed capital formation climbing by 11.04%, signaling vigorous business expansions. This is particularly noteworthy as the service sector experienced a deceleration, impacted by a decline in global financial services demand. The agriculture sector also faced challenges due to less-than-ideal monsoon rains, which affected the summer crop harvest.
Economists have praised the broad-based economic improvement, especially in non-agricultural sectors. Despite these positive indicators, the RBI is expected to maintain a cautious stance on interest rates in light of inflation concerns. The central bank is predicted to keep interest rates unchanged at their upcoming policy meeting on December 8, reflecting confidence in the strong industrial performance and investment growth.
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