In a much needed boost for the Indian economy which has been continuously underperforming, India beat China and retained its position as the world’s fastest growing economy in January-March quarter.
India’s gross domestic product or GDP accelerated to 7.7% in the March quarter which was the fastest in seven quarters.
The overall growth was due to strong growth in construction which was 11.5%, agriculture which was 4.5% and manufacturing at 9.1 %.
Growth for Asia’s third-largest economy, reported by the Ministry of Statistics, trumped forecasts in a Reuters poll for annual growth of 7.3 per cent. GDP had grown at a revised 7 per cent in October-December quarter.
For the full year (2017-18), GDP expanded at 6.7 per cent, lower than the 7.1 per cent recorded in the previous year.
Tushar Arora, senior economist at HDFC Bank, said: “Today’s GDP number is very comforting and should put a lot of concerns to rest. It seems like we have moved beyond the teething troubles related to GST implementation. The pick-up in investment activity (fixed capital formation) is also a good sign.”
The faster pace of growth in the latest quarter might also strengthen expectations for a rate hike by the RBI later this year. “We expect RBI to revise its policy stance in June and follow it up with a hike of 25 bps in August policy,” said Garima Kapoor, economist and vice president at Elara Capital.
Economists are expecting India’s economy to grow more than 7 % in 2018-19, aided by a normal monsoon and also growth in private investment.
Though global rating agency Moody’s earlier this week cut its GDP growth forecast for India due to higher oil prices and tighter financial conditions, it still expects the country’s GDP to expand by 7.3 per cent this fiscal year.
This is good news for India whose economy was consistently underperforming due to bad monsoons and low private investment. These have given the boost to the economy and the economy is expected to grow stronger. This is good news for all businesses and investors as a strong economy will definitely mean growth and profitability in investments and business.
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