CONFEDERATION of Indian Industries has hailed growth of Gross Domestic Product at the rate of 7.7 per cent in India between January and March 2018 saying “The rebound in growth reinforces CII’s own assessment that the economy is back on track and is set for a strong recovery after the period of disruptions post demonetisation and GST implementation. The GDP numbers for 2017-18 marginally overshoots the advance estimates of GDP released earlier this year, said CII Director General Chandrajit Banerjee .Commenting on GDP, Assocham’s Secretary General D S Rawat said “While Indian economy is in cyclical recovery led by both investment and consumption, however, higher oil prices and tighter financial conditions will weigh on the pace of acceleration.”
After release of the GDP numbers, much maligned NDA Government has reason to be jubilant after it is reported that the fourth quarter of the 2017-18 FY between January and March 2018 recorded 7.7 per cent growth of Gross Domestic National Product. Opposition parties are accusing the Prime Minister of ruining the national economy by what they call unwarranted demonetization and implementation of Goods and Services Tax –GST.Hence, reported robust performance in several sectors of economy during the period has come as a great relief to Team Narendra Modi.
Agricultural growth is estimated at 4.5 per cent, manufacturing sector reported 9.1 per cent and construction sector finished at 11.5 per cent growth enabling India to retain the coveted tag as among the fastest growing economies. The GDP growth at the rate of 7.7 per cent is claimed to be higher than that of China during the period when it achieved 6.8 per cent during the January-March period. However, The Business Standard reports that on yearly basis, the Indian economy grew at a four-year low of 6.7 per cent in 2017-18 compared to 7.1 per cent in the previous fiscal. The previous low was recorded in 2013-14 at 6.4 per cent, the last quarter under the previous regime.
“GDP at 2011-12 prices in the fourth quarter of 2017-18 registered growth rate of 7.7 per cent as against 5.6 per cent, 6.3 per cent and 7 per cent, respectively, in the first three quarters of 2017-18. Rapid growth in agriculture (4.5 per cent), manufacturing (9.1 per cent) and construction (11.5 per cent) contributed to the overall growth,” the Central Statistics Office (CSO) said after releasing national accounts data.
The previous high GDP growth of 8.1 per cent was recorded in the April-June quarter of 2016-17. The GDP growth was 6.1 per cent in January-March 2016-17.Reacting to the GDP data at a press conference in New Delhi, Finance Secretary Hasmukh Adhia said “The constant increasing trend of quarterly GDP numbers in the four quarters of 2017-18 at 5.6 per cent, 6.3 per cent, 7 per cent and 7.7 per cent indicates that the structural measures of reforms undertaken by government is now bringing rich dividends in the form of higher GDP growth rate.”
Adia said decline in the annual GDP growth has been mainly due to dip in manufacturing, agriculture and mining activities. However, construction and financial services showed some improvement. The gross value addition (GVA) for the January-March quarter expanded at 7.6 per cent from 6 per cent a year ago on the basis of data.Manufacturing sector GVA grew at 9.1 per cent in fourth quarter, up from 6.1 per cent year ago. Similarly, construction sector GVA rose 11.5 per cent in the fourth quarter as compared to 3.9 per cent a year ago.GVA growth of trade, hotels, transport and communication and services related to broadcasting grew at 6.8 per cent in the fourth quarter as compared to 5.5 per cent a year ago. Similarly, financial, real estate and professional services GVA grew at a higher rate of 5 per cent in the quarter as compared to 1 per cent a year ago.Mining and quarrying did not perform well in January-March as GVA of the segment grew at 2.7 per cent in the fourth quarter, down from 18.8 per cent in the year-ago period.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. Electricity, gas, water supply and other utility services GVA grew at 7.7 per cent in the fourth quarter as compared to 8.1 per cent a year earlier.Real GVA (at basic constant 2011-12 prices for 2017-18) is now estimated at Rs 119.76 lakh crore, showing a growth rate of 6.5 per cent over first revised estimates of GVA for 2016-17 of Rs 112.48 lakh crore. The GVA growth was 7.1 per cent in 2016-17. A barometer of investment, the gross fixed capital formation (GFCF) at current prices is estimated at Rs 47.79 lakh crore in 2017-18 as against Rs 43.52 lakh crore in 2016-17.At constant (2011-12) prices, the GFCF is estimated at Rs 40.88 lakh crore in 2017-18 as against Rs 37.98 lakh crore in 2016-17.In terms of GDP, the rates of GFCF at current and constant (2011-12) prices during 2017-18 are estimated at 28.5 per cent and 31.4 per cent, respectively, as against the corresponding rates of 28.5 per cent and 31.1 per cent, respectively, in 2016-17.Anyway, the next quarters will be keenly watched as macroeconomists in one voice say rising prices of petrol and diesel will adversely impact India’s economy.