India's growth likely topped 7 percent again in January-March quarter

Posted June 03, 2018

On Monday, Economic Affairs Secretary Subhash Chandra Garg said growth in Asia's third largest economy was expected to grow 7.3-7.5 per cent.

An Indian Finance Ministry official told CNBC on Monday that estimated growth in the last fiscal year, which ended on March 31, was 6.7 per cent, below 2016/17's pace of 7.1 per cent.

The GDP growth data released yesterday presents an optimistic picture of the economy, reflected in y-o-y growth for Q4, especially for construction and manufacturing sectors, Ficci President Rashesh Shah said.

The fourth quarter GDP number is the highest since demonetisation in November 2016.

For FY18, GDP grew by 6.7 per cent which is considered to be lowest amongst the 4 years of the NDA government. GVA (ex-agriculture and government services) eased to 7.2% from 7.4%, reflecting softness in some of the private services (trade and financial services).

Though the farm GVA output growth was well above satisfactory mark of 4 per cent at 4.5 per cent in fourth quarter, it was lower than 7.1 per cent a year ago. The country is expected have a growth rate of 6.9 per cent in 2018, compared to 6.7 per cent in 2017 and eight per cent in 2016.

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He said the income that would be generated from HSR-linked development projects far exceeded that of ticket sales, which included an increase in property value, the creation of 442,000 job opportunities, technology transfer, rapid local economic growth and tourism.

"Global oil prices will affect inflation and thereby challenge the central bank to hike interest rates", said Datar, referring to next month's monetary policy meeting of the Reserve Bank of India. "The ability of public sector banks to support lending growth, the risk of monetary tightening and trade wars, and impact of higher crude oil prices on purchasing power of consumers and corporate earnings have emerged as risks", said Aditi Nayar, principal economist at ICRA.

"The Indian economy is in cyclical recovery led by both investment and consumption".

"(It) seems like we have moved beyond the teething troubles related to GST implementation", said Tushar Arora, a senior economist at HDFC Bank.

The biggest risk India faces is rising crude oil prices, which this month hit US$80 a barrel, their highest since 2014.

Talking about growth rates in 2018, Madhavi Bokil, Moody's VP Senior Credit Officer said market turbulence in emerging market counties poses the risk of a negative effect on several countries, while also highlighting the escalating trade tensions between the United States and China as being another looming threat.

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