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

Hannah Rogers
June 4, 2018

The figure surpassed China's growth rate of 6.8 percent in the January-March quarter, confirming India as the fastest growing major economy. Hence, the Centre is justified in forecasting 7.5 per cent GDP growth this fiscal, against 6.7 per cent in FY18.

India's GDP growth rate of 7.7 percent, recorded in the fourth quarter of 2017-2018, shows that the country's economy was on an uptrend, said president of Federation of Indian Chambers of Commerce and Industry (FICCI) Rashesh Shah on Friday. "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", the statement by Ministry of Statistics and Programme Implementation said. The growth rate in per capita income is estimated at 5.4 per cent during 2017-18, as against 5.7 per cent in the previous year.

The rate is higher against 5.6 percent, 6.3 percent and 7.0 percent respectively, in the first three quarters, Q1, Q2 and Q3 of 2017-18.

The minister also hailed and credited Prime Minister Narendra Modi and Finance Minister Arun Jaitley for the development.

Economic Affairs Secretary Subhash Chandra said all sectors of the economy, including manufacturing, construction and agriculture, did well in the fourth quarter of the last fiscal.

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"GDP growth has been increasing continuously every quarter". The moderation in growth was driven by impacts from successive policy shocks of demonetization and the Goods and Services Tax; and the twin balance sheet problem of high corporate leverage and banks' stressed balance sheets.

Mining and quarrying did not perform well in January-March as GVA of the segment grew at 2.7 per cent, down from 18.8 per cent in the year-ago period. "So we at this moment feel that we should retain (the growth estimate)", he said.

It also highlighted an acceleration in rural consumption, higher minimum support prices and a normal monsoon to stabilize growth on the domestic front. The International Monetary Fund expects economic growth could reach 7.4 percent in 2018/19. But private investment is not expected to boost growth significantly over the next few quarters, given the high level of slack capacity and lending constraints in the banking sector. 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.

As per the report, India's current account deficit will increase.

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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