INDIA REGAINS FASTEST GROWING ECONOMY TAG
India has regained its status as the world's fastest growing major economy after it clocked 7.2 per cent growth in the OctoberDecember quarter, surpassing China for the first time in a year as government spending, manufacturing and services all picked up. The 7.2 per cent expansion by the Asia's third-largest economy, its fastest in five quarters, beat China's 6.8 per cent. For the full 2017-18 fiscal (April 2017 to March 2018), GDP growth has now been pegged at 6.6 per cent as against 6.5 per cent forecast earlier and 7.1 per cent growth achieved in 2016-17. Besides, the data for eight core infrastructure sectors including coal, steel, cement and petroleum, showed improved growth of 6.7 per cent for January, up from 3.4 per cent in same month a year ago. The finance ministry said that the data indicate a broad-based and significant acceleration of real economic activity as projected in the Economic Survey. "Robust growth in manufacturing and significant acceleration in construction mark a turnaround in the country’s economic growth momentum," the ministry said in a statement. According to the chairman of EAC to PM, Bibek Debroy, the economy is on the right track to accelerate and the current expansion in the growth rate in a reflection of the reforms initiated by the government. The growth will pick up further in the upcoming quarter driven by the government's commitment to implement structural reforms and aided by higher growth in the industrial and services sector as well as spending by the Centre. "India is on the right path to become one of the fastest major economies in the World surpassing China," Debroy said. The growth for the second quarter (July-September) has been revised upwards to 6.5 per cent, from 6.3 per cent estimated earlier by the CSO. The previous high was recorded at 7.5 per cent in the JulySeptember quarter of 2016-17. The CSO said that the real GDP or Gross Domestic Product (GDP) at constant (2011-12) prices in 2017- 18 is likely to be Rs 130.04 lakh crore, as against the first revised estimate for 2016-17 of Rs 121.96 lakh crore, released on January 31. CII Director General Chandrajit Banerjee said: "The significant improvement in GDP growth, which has accelerated to a robust 7.2 per cent in the third quarter as against 6.5 per cent in the previous quarter is noteworthy and strengthens the perception that the Indian economy is at the threshold of a sustained rebound in growth." The gross valued added (GVA) for manufacturing in the quarter under review grew at 8.9 per cent higher than 6.9 per cent in the previous quarter. Similarly, the farm sector GVA grew at 4.1 per cent compared to 2.7 per cent in the previous quarter. The construction sector recorded a growth of 6.8 per cent, higher than 2.8 per cent in previous quarter. The services segment including financial services grew at rate of 6.7 per cent up from 6.4 per cent in previous quarter. As per the data, eight core sectors -- coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity -- had grown by 4.2 per cent in December, and 7.4 per cent in November of the current financial year. Petroleum refinery production spurted 11 per cent in January against a flat output in the year-ago month. Cement output jumped 20.7 per cent in the month against 13.3 per cent contraction in the year ago period. Electricity generation growth also fast paced to 8.2 per cent in January against 5.2 per cent in January 2017. Coal sector output improved by 3 per cent and steel production by 3.7 per cent in January 2018. Crude oil production however dropped 3.2 per cent, fertilizers by 1.6 per cent and natural gas by 1 per cent in the month under review. Cumulatively, the growth in the eight core sectors during AprilJanuary this fiscal slowed to 4.3 per cent as against 5.1 per cent in the same period last fiscal. The growth in key sectors will have implications for the Index of Industrial Production (IIP) as these eight segments account for about 41 per cent of the total factory output.
Bibek Debroy, Economist