Investment, one of the important engines of growth, regained momentum, but consumption, the lifeblood of the economy, is yet to find its own territory. On the supply side, sequential momentum was held up by agriculture and construction, while on the demand side, growth was supported by government consumption, investment and net exports. The good news is that all sectors are now above pre-Covid levels in real terms; that the current sequential momentum indicates an annualised growth of 6% is a bonus. The growth trajectory could also lose steam if weak consumption persists amid the impact of cost-push inflation. Lastly, business margins are likely to be compressed, amid an incomplete pass-through of input price pressures, while higher inflation would constrain demand growth.

Source: Indian Express June 02, 2022 02:16 UTC