7.7-pct GDP growth rate shows India's economy on uptrend: business leader

The Indian economy grew by 7.7 per cent, in January-March 2018, according to data from the Central Statistics Office.

India is rebounding from an economic slowdown, with growth seen at more than 7 percent, only to find itself ensnared by the volatility engulfing emerging markets.

"Rapid growth in agriculture (4.5%), manufacturing (9.1%) and construction sectors (11.5%) contributed to the overall growth", the Indian government said. Demand seemed to have picked up on the back of a concerted increase in government spending, from 10.3 per cent of GDP in 2016-17 to 10.8 per cent previous year at constant prices, perhaps largely on account of pay panel obligations.

It also means India continues to grow faster than China, which posted growth of 6.8% in the first quarter of 2018.

Aditi Nayar, Principal Economist, ICRA, said, "We expect the economic growth to consolidate above 7 per cent in 2018-19, on the back of the continued benefits of the implementation of the GST, healthy consumption demand, government expenditure, and a back-ended pickup in investment activity".

However, services sectors such as trade, hotels, transport (6.8%) and financial services (5%) decelerated from their levels in the third quarter, signaling a lingering impact from disruptions caused by hasty implementation of the goods and services tax (GST) as well as the state of the banking sector.

He added that what is most noticeable is the increase in the growth rate of Gross Value Added of manufacturing sector in the last two quarters of 2017-18 at 8.5 and 9.1 percent at constant price.

Forecasts ranged from 6.9 to 7.7 percent.

The financing, real estate and insurance sector's growth lower at 5 percent against 6.9 percent in December 2017.

The industry body has emphasised the need to sustain the growth momentum, while suggest the policy makers to take steps to revive private investments following the recent push to accelerate infrastructure spending as well as to improve the business climate and (eventually) less leveraged corporate and banks' balance sheets.

The gross national income at current prices is estimated at Rs 165.87 lakh crore during 2017-18, as compared to Rs 150.77 lakh crore during 2016-17, showing a rise of 10 percent.

At constant (2011-12) prices, the GFCF is estimated at Rs 40.88 lakh crore in 2017-18 as against Rs 37.98 lakh crore in 2016-17. "The GDP numbers for 2017-18 marginally overshoots the advance estimates of GDP released earlier this year".

Replying to a query, the Secretary said, oil pricing policy needs to be looked at if prices are elevated.

  • Jon Douglas