Published: Mon, June 04, 2018
Worldwide | By Lisa Hogan

Indian Economy is on right track: Piyush Goyal

Indian Economy is on right track: Piyush Goyal

India's GDP grew slightly better than expected at 7.7% for the quarter ending March 31, 2018, raising the prospect of an interest rate hike by the country's central bank later this year.

The significant expansion in GDP print has sprung a positive surprise by notching up an impressive growth of 7.7 per cent in the fourth quarter of 2017-18 and "marginally overshoots the advance estimates of GDP released earlier this year", said CII Director General Chandrajit Banerjee.

Showing signs of fully coming out of the shadows of demonetisation and Goods and Services Tax (GST), India's GDP for the fourth quarter of 2017-18 grew at 7.7 per cent, while for the full financial year 2017-18 it touched 6.7 per cent.

Rapid growth in agriculture (4.5 per cent), manufacturing (9.1 per cent) and construction sectors (11.5 per cent) contributed to the overall growth of the GDP, the statement added.

India's economy expanded 7.7 per cent year-on-year during the January-March quarter, recording the quickest pace of growth in almost two years. "On balance, GDP and GVA growth are expected to improve to 7.1% and 7.0%, respectively, in FY2019, from 6.7% and 6.5%, respectively, in FY2018".

Real GVA (at basic constant 2011-12 prices for 2017-18) is now estimated at Rs 119.76 lakh crore, showing a growth rate of 6.5 per cent over first revised estimates of GVA for 2016-17 of Rs 112.48 lakh crore. There have been various quarters and years when the oil prices have gone up but there has been growth also. The pickup in growth surely offers a boost to prime minister Narandra Modi, who will be seeking a second term next year.

The "agriculture, forestry and fishing" sector showed a growth rate of 3.4 per cent as against the previous year's growth rate of 6.3 per cent, while the growth in the "manufacturing" sector was estimated at 5.7 per cent as against the previous year's growth rate of 7.9 per cent.

"GDP growth has been increasing continuously every quarter".

"Seems like we have moved beyond the teething troubles related to GST implementation", said Tushar Arora, a senior economist at HDFC Bank.

Growth in Asia's third-largest economy, reported by the ministry, trumped forecasts in a Reuters poll of annual growth at 7.3 percent. However, we expect tighter financing conditions, rising oil prices and slower investments in the run-up to elections to slow GDP growth later in the year. Healthy topline and bottomline growth in the corporate sector, as well as buoyant cement and steel output point to an upturn in the business cycle. India meets 80 per cent of its oil needs from imports.

The Indian government earlier this month sought assurances from Saudi Arabia, OPEC's biggest producer, that oil prices would remain "stable and moderate".

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