India gathered momentum from January to March to extend its lead as the world’s fastest growing large economy, helping Prime Minister Narendra Modi craft an impressive sales pitch for meetings with investors in the USA next week. The official figures showed that the growth in manufacturing shot up to 9.3 per cent, while agriculture grew 2.3 per cent during the fourth quarter of 2015-16.
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Data released by the Central Statistics Office on Tuesday showed that India’s economy grew at 7.9% in January-March, which is the fastest pace seen over the previous six quarters.
Finance Minister said even when global growth has slowed down to close to 3 per cent, developed world seems to be growing at lesser pace.
“And we have a pipeline of reforms still left over the next few years to be implemented and notwithstanding global slowdown and two years of bad monsoon, we have reached a situation where we still have the highest growth rate in the world”, he said.
“The FDI reforms, reddressal of woes in the power sector, steel sector problems have been addressed. the outcome of all these initiatives is the 9.3 per cent growth recorded by manufacturing sector in 2015-16”, the senior officer said.
In the March quarter, the Indian economy grew by 7.9%, speeding up from December quarter’s 7.2% growth and exceeding analyst expectation of 7.5%.
For the current fiscal year that started in April, an economic outlook survey by the Federation of Indian Chambers of Commerce and Industry estimates GDP growth of 7.7%, on the back of improvements in the agriculture and industrial sectors.
It said the revisions were based on, among other things, early results on the performance of corporate sector for April-December, 2015 (based on advance filings up to 30th January 2016), IIP data for April-March, 2015-2016, and the latest available information on Sales tax collection and State revenue expenditure. This is also important if the “Make in India” programme is to succeed and create a huge number of entrepreneurs who can become job creators.
“At 7.6 percent, India’s GDP growth rate for FY16 is at a five year high”.
The data agency also revised down economic growth in 2015 to 1.1%, from its previous estimate of 1.2%.
There is no reason why India’s GDP growth and employment can not increase if properly handled even though global growth is still weak so exports can not grow as they should. The negative contribution from net exports to GDP growth fell to -0.1 percentage point in during the first quarter from -0.5 percentage point in the fourth quarter of 2015, according to a report by Nomura, Asia Insights.
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The prediction implies the economy will contract in the second quarter. “However, the sustainability of this growth momentum will certainly depend on how well and how fast government can help revive the investment, especially in the private sector”, ASSOCHAM President said. With impending increases in wages and pensions of government employees set to further fuel consumer spending, India’s growth mix looks potentially inflationary.
