India's economy grows faster-than-expected in Jan-March on strong manufacturing

India's economy grew at a faster-than-expected pace of 7.8% year-on-year in the January-March quarter, helped by strong growth in the manufacturing sector, and economists expect the momentum to remain strong this year.

The gross domestic product, opens new tab growth in the first three months of 2024, the fourth quarter of 2023/24 fiscal year, was lower than a revised 8.6% expansion in the previous quarter, government data released on Friday showed.

However, it was higher than the 6.7% growth forecast by economists in a Reuters poll.

In the October-December quarter, the headline growth figure was boosted by a sharp fall in subsidies, while gross value added (GVA), seen by economists as a more stable measure of growth, rose 6.5%.

In the March quarter, GVA rose by 6.3%.

India's economic growth for the full fiscal year 2023/24 was revised up to 8.2%, the highest among large economies globally, from an earlier government estimate of 7.6%.

The growth figures will be a boost for Indian Prime Minister Narendra Modi, who is largely expected to win a third term in the national election, with results scheduled to be released on June 4.

Manufacturing output rose 8.9% year-on-year in the three months ending in March, compared with a revised expansion of 11.5% in the previous quarter, while farm output growth accelerated to 0.6% after revised 0.4% growth in the previous quarter, the data showed.

Investors are looking ahead to the election results and full-year budget in mid-July to assess any steps by the new government to boost the economy.

The Reserve Bank of India's (RBI) record surplus transfer of 2.11 trillion rupees ($25.3 billion) earlier this month is likely to allow the government to increase state spending or cut the fiscal deficit.