The Indian economy recorded double-digit growth in Q1 FY23, buoyed by a favourable base effect and catch-up in the services sector. Real GDP grew by 13.5% YoY in Q1, driven by private consumption and investment growth, while net exports dragged down overall growth. On the supply side, the growth momentum was led by services and industry, while agriculture remained resilient. We retain our projection of real GDP growth of 7% YoY in FY23, with downside risks. We expect a contained COVID situation, higher vaccination coverage, the government’s CAPEX, and ongoing catch-up in the services sector to support economic recovery. However, negative factors, including global growth slowdown, inflationary environment, and monetary policy tightening could weigh on the economic outlook.