India growth slows on inflation, higher oil prices

Agence France-Presse

Posted at May 31 2022 08:51 PM

Indian people sit on a tractor during a hot afternoon on the outskirts of New Delhi, India, 19 May 2022. Harish Tyagi, EPA-EFE
Indian people sit on a tractor during a hot afternoon on the outskirts of New Delhi, India, 19 May 2022. Harish Tyagi, EPA-EFE

NEW DELHI - India's growth slowed further in the first three months of 2022, the National Statistics Office said Tuesday, with inflation and higher oil prices denting a post-pandemic recovery.

Asia's third-largest economy grew 4.1 percent, year on year, in the last quarter, NSO data showed.

Annual growth for the 12 months to the end of March stood at 8.7 percent.

Rising global commodity prices have sparked concern among policymakers, with India's central bank announcing its first interest rate hike in nearly four years earlier this month. 

The country of 1.4 billion people imports more than 80 percent of its crude oil and the cost of meeting domestic fuel demand has soared since Russia's February invasion of Ukraine.

India is also the world's largest importer of edible oils, prices of which are at record highs since the conflict began. 

Prime Minister Narendra Modi's government earlier this month announced tax breaks to offset higher food and petrol costs.

The $26 billion cost of the scheme will likely blow out the government's budget deficit beyond its target for 2022-23, which it put at 6.4 percent of GDP.

Consumer inflation hit 6.95 percent in March, according to the Reserve Bank of India, which slashed its own yearly growth forecast to 7.2 percent.

"Alarmingly, persistent and spreading inflationary pressures are becoming more acute with every passing day," Reserve Bank of India governor Shaktikanta Das said earlier this month.

India saw a dramatic uptick in economic activity at the end of 2021 after the coronavirus pandemic sparked its worst recession since independence from Britain 75 years ago. 

Extended lockdowns hit consumer spending and brought factories to a standstill during the Covid-19 outbreak, which at its peak saw thousands of people dying across the country each day, overwhelming hospitals and crematoriums.

Several Indian states briefly imposed mild restrictions on public gatherings and commercial activity after an outbreak of the highly infectious Omicron variant of the virus.