India’s real gross domestic product (GDP) growth rose to 7.9% year-on-year (y-o-y) during the quarter ended March 2016, from 7.2% in October-December 2015. Significantly, the figure also solodifies India’s standing as the world’s fastest growing economy.
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“Private capex will likely remain the missing link for a few more quarters with growth continuing to be heavily reliant on government spending”, said Upasna Bhardwaj, an economist at Kotak Mahindra Bank. A growth rate of 1.4 per cent has been recorded.
But, economists reckon increasing oil prices could retard the growth rate, while boosting the inflation rate.
According to the latest GDP data, gross fixed capital formation (GFCF) – a marker for new capacity additions by firms – grew at 3.9% in 2015-16 compared to 4.9% in 2014-15, mirroring subdued private and government investment activity.
Mining, according to an Indian Express report, grew 8.6 percent in the March quarter, up from 7.1 per cent in the previous quarter.
Success in bringing down inflation has given the Reserve Bank of India (RBI) room to cut its policy repo rate by 150 basis points since January 2015, reducing it to 6.50 per cent – the lowest level in more than five years.
Yadav said the contribution of the farm sector to this “spectacular” growth is significant because India has recently faced two consecutive draught years, which affects agriculture negatively.
The 7.6 per cent growth rate for 2015-16 was the same as that projected by the CSO in February this year.
Specifically within Asia, except for Japan (which accounts for 68% of EM), of the 10 top economies in the region, seven have debt-to-GDP close to 200% or above; six are facing a rising age dependency ratio (ageing population is growing faster than workingage population) and eight have GDP deflator growth below 2%.
The prediction implies the economy will contract in the second three months of the year based on the central bank’s prediction of growth at a pace of 1.0 per cent.
Electricity, water and gas production growth also sequentially up to 9.3% from 5.6%. He said overall investment would continue to be driven by the government. Meanwhile, the previously reported 0.2% increase in our real imports was revised to a 0.2% decrease, and since imports subtract from GDP because they represent either consumption or investment that was not produced here, their shrinkage added 0.03 percentage points to 4th quarter GDP.
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Headline economic growth has accelerated in the three months to March to 7.9 percent. “With the government giving a strong impetus to the rural sector in Budget 2016-17 and expectations of a normal monsoon, both demand and investments are expected to further strengthen”, said Ficci president Harshavardhan Neotia.
