GDP expanded 7.1% year-on-year in the April-June period, slowing from a better-than-expected 7.8% in the previous quarter | Illustration: Binay Sinha

Indian economic growth slowed slightly to 7.1 per cent in the April-June quarter, according to a Reuters poll of economists, on more subdued private investment, though supported by consumer spending and government expenditure.

Last ​year's Goods and Services Tax rate cut and income tax reductions likely continued ​to support household disposable income and demand, helping cushion the impact of rising inflation. But economists expect the ‌recent pickup in private investment to be temporary.

Risks to the outlook for Asia's third-largest economy, which imports more than 85 per cent of its oil, have increased as crude prices are above $90 a barrel and may climb higher.

Higher fuel and transport costs could strain household budgets while also raising costs for businesses already hesitant to invest because of uncertainty around the US-Iran war.

Gross domestic product expanded 7.1 per cent year-on-year in the April-June period, slowing from a better-than-expected 7.8 per cent in the previous quarter, according to the median estimate in an August 17 to 24 Reuters poll of 58 economists.

Forecasts for the data due on August 31 ranged from 6.2 per cent to 8.0 per cent.

"We started seeing some sort of a nascent recovery in private investment since the second half of last year but it is yet to become stronger, ‌more durable and more broad-based," said Sakshi Gupta, principal economist at HDFC Bank.

"The conflict perhaps made private players a little bit more cautious with their outlook, in terms of their capacity expansion plans in certain sectors."

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