The Indian economy is unexpectedly picking up Steam, but the effect of Trump’s tariff is waving

Written by Manuj Kumar and Niconage Uri

New Delhi (Reuters) -India’s economy unrelated to Steam in the quarter -April to June, and challenged the slow growth expectations even with a sharp rise in the United States Definitions On Indian imports threaten weights in commercial activity in the upcoming neighborhoods.

The United States doubled customs duties on Indian commodities up to 50 % on Wednesday around the ongoing imports in India from Russian oil. This is what started in the most punitive rates of trading partners in the United States along with Brazil and economists say this step can hurt exports including textiles, leather goods and chemicals.

Government data on Friday showed that the gross domestic product expanded by 7.8 % in the last quarter in the third largest economy in Asia, the fastest in five quarters, from 7.4 % in the previous three months.

This was much higher than 6.7 % of the expansion economists had signed a Reuters poll.

The total added value (GVA), which is seen as a more accurate measure of basic economic activity, has grown 7.6 % in the three months to June, from 6.8 % in the previous quarter. GVA excludes indirect taxes and government support payments, which tend to be volatile.

At this pace, India is still one of the fastest growing major economies, despite the increasing export expectations after the American President Donald TrumpHigh tariff.

“The economy is still on its way to expanding 7 % of this year, despite the blow from the American customs tariff.”

“Despite the tariff for mutual sanctions, we maintain our growth scale (by 6.3 % -6.8 %) for a full year,” the chief economic advisor in India said at a press conference after the issuance of the data.

The spending on the consumer rises

Special consumer spending, which constitutes about 57 % of GDP, increased by 7.0 % year on April to June, compared to 6 % in the previous quarter, with increased rural spending, and the demand for agricultural and agricultural equipment remained as stable tractors.

The government of Prime Minister Narendra Modi pledged to support the sectors struck by the American customs tariff and said it would propose tax cuts to stimulate the local demand. Earlier has reduced income taxes from April this year.

“Special consumption is supported by tax mitigation, price discounts, and crops, although families may postpone estimated purchases until the proposed tax cuts in the holiday season are enter

Government spending increased by 7.4 % in the three months to June, compared to a decrease of 1.8 % in the previous quarter.

Capital spending increased by 7.8 % in this quarter, although some private companies were seen holding investments amid global uncertainty after increased customs tariffs in Washington since April.

Manufacturing production increased by 7.7 % on an annual basis in April to June, in the first quarter of the fiscal year of India, compared to 4.8 % in the previous quarter, while building expanded by 7.6 %, from 10.8 %.

The agricultural sector expanded by 3.7 %, compared to 5.4 % in the previous three quarters.

The US tariff weighs growth

Economists have warned that growth may slowly slow down when the effects of import duties begin in the United States.

Indian government sources said that New Delhi hopes that the United States will review the additional tariff by 25 % imposed this week, which increased to 50 % of the rate imposed on a group of Indian imports. But so far there are no indications of renewable conversations between the two sides.

“The customs tariffs of 50 % can reach exports and have” domino effect on employment, wages and private consumption. “

Exporting groups estimate that customs tariffs can affect approximately 55 % of $ 87 billion in exports in India to the United States, while taking advantage of competitors such as Vietnam, Bangladesh and China.

Some economists warn that the American customs tariff may fly from 0.6 to 0.8 Celsius of India’s growth over a year, as the weakest is its attractiveness as an alternative center for manufacturing to China.

Nagsuran’s chief economic consultant said that the additional definitions imposed by the United States on India could be “short -lived.”

“There will be some negative shock to manufacturing numbers for July to September, but it is difficult to make an accurate appreciation,” said Nageswaran.

While the growth of real gross domestic product is escalating, the growth of the nominal GDP, which slows down the inflation, to 8.8 % in the quarter of April to June, after average about 11 % over the previous eight quarters.

Low nominal growth is likely to be burdened on corporate profits and standard stock indicators.

The Ruce of India fell to a record level of 88.30 to the dollar on Friday, when the American definitions are filled, while reference stock indicators seemed for a month for a month in a row.

(Participated in reports from Manuj Kumar and Niconage Ohairi in New Hatestation Kim Kojil, Francis Kerry and Suzanne Fenton)

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