GDP growth gives India cause for celebration

Daniel Fowler
September 2, 2018

Construction activity, has also rebounded strongly, growing 8.7 percent in April-June, from 1.8 percent in the same quarter past year, showing heightened activity in infrastructure, particularly road construction with strong multiplier effects across key sectors such as cement and steel. "Ind-ia is witnessing an expansion of the neo-middle class", said Union finance minister Arun Jaitley.

Economic Affairs Secretary Subhash Chandra Garg tweeted: "V shaped recovery of growth in Indian economy is complete now".

The Indian economy managed a strong show in the April-June quarter of the current fiscal on the back of strong core performance and a healthy base.

The agriculture sector grew 5.3 percent, from 3 percent in the same period a year ago, largely reflecting a strong Rabi or winter sown harvest. "These are essential for growth and what we see today is a result of all the reforms, including the ease of doing business, " he said.

In the April-June quarter of current fiscal, the Indian economy grew at 15-quarter high of 8.2 percent, with a good show by manufacturing and farm sectors, as per the data released by the government today.

Comparing the same quarter previous year figures, the manufacturing sector grew at 13.5 5 % from -1.8% per cent; Agriculture sector registered fair growth figures at 5.3% from 3%, Construction also recovered by recording its growth figures at 8.7% from 1.8%.

"India's GDP for the first quarter this year growing at 8.2% in otherwise an environment of global turmoil represents the potential of New India".

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Further, he said 8.2 per cent growth in the first quarter over 5.6 per cent growth in the corresponding quarter last fiscal can not be simply explained by the base effect. Merchandise import growth has slowed because of gold imports, while export growth has also weakened.

He added that despite an uncertain worldwide environment and volatile crude oil prices, India's sustained growth reflects its strong resilience to adverse global conditions, because of strong economic fundamentals.

India's gross domestic product (GDP) was valued at $2.597 trillion at the end of 2017 overtaking the French economy, which was valued at $2.582 trillion past year.

To be sure, there is an element of base effect in the latest growth figures.

"Same is true about the construction which again is job-generating sector and grew by 8.7 percent", said Sandeep Jajodia, President of the chamber. "And when we reach Q3 and Q4, the rate of growth may decline and the annual growth rate may be more or less like last year's", he added.

IIP growth, which is taken as an indicator of activity in the unorganized manufacturing sector, has also averaged higher in Q1 (at 4.5% in Q1 from 1.9% same time last year).

The growth in economic output in April-June was faster than the 7.7% growth the government had reported for the January-March quarter. As The Wire has pointed out, GVA has over the last few years become a more important measure of economic growth as it removes the impact of subsidies and indirect taxes.

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