The country’s economic growth expanded 7.8 per cent in the April-June quarter of the fiscal, a four-quarter high. Economists said growth has likely reached the peak for the fiscal.

Domestic private consumption and fixed investment, along with services, drove expansion even as the economy currently battles high inflation.

The risk of a ''below-normal'' monsoon continues to cloud outlook, while a tighter monetary policy and weak exports may pull down growth in the second half of the fiscal, economists said.

The Q1 GDP, however, is lower than the RBI's estimate of 8 per cent , but is in line with the consensus forecast of 7.8 per cent.

The gross domestic product (GDP) expanded 13.1 per cent in the April-June quarter of 2022-23. GDP during the January-March quarter of 2022-23 was 6.1 per cent and 4.5 per cent in October-December.

According to official data, private final consumption expenditure grew 6 per cent, while gross fixed capital formation increased 8 per cent year-on-year in the first quarter.

Government final consumption expenditure (GFCE) contracted 0.7 per cent against a low single digit growth of 2.3 per cent in the fourth quarter of the fiscal. Exports also contracted 7.74 per cent in the quarter.

D.K. Srivastava, chief policy advisor, EY India, said, “the proximity of real GDP growth at 7.8 per cent with nominal GDP growth at only 8 per cent has significant fiscal implications. These growth rates imply that the implicit price deflator (IPD) based inflation is only 0.2 per cent. Such a low IPD inflation is seen after fifteen quarters. With a low nominal GDP growth, tax revenue growth is expected to be muted.”

“The Centre’s gross tax revenue has grown only 3.3 per cent in the first quarter and 2.8 per cent during the first four months of 2023-24. In spite of the central government focusing on expanding capital expenditure, growth in government revenue expenditure has remained subdued,” he said.

According to the National Statistical Office (NSO) data, agriculture sector gross value added (GVA) recorded growth of 3.5 per cent, up from 2.4 per cent from a year ago.

The expansion in 'financial, real estate and professional services' GVA was 12.2 per cent, up from 8.5 per cent in the year-ago quarter. However, GVA in the manufacturing sector decelerated to 4.7 per cent in the first quarter of the current fiscal compared with 6.1 per cent in the year-ago period.

Dharmakirti Joshi, chief economist, Crisil said “most indicators, particularly the government frontloading its aggressive investment target for the current fiscal, were hinting at it. This is likely to be the peak growth performance for this fiscal. Growth in the July-September quarter will be moderated by softening consumption as spiking inflation will dent discretionary-spending power."