India's GDP growth surges over 8 percent, boost for Modi before election

Moody’s Investor Service recently said the government was likely to miss its fiscal deficit target in 2018-19 due to higher than budgeted oil prices and rising interest rate scenario

The Indian economy grew at 15-quarter high of 8.2 percent in the April-June quarter of current fiscal on good show by manufacturing and farm sectors, according to the government data released today.

Union Finance Secretary Hasmukh Adhia said: "The GDP growth rate of 8.2 per cent for the first quarter of 2018-19 indicates several structural reforms such as the GST have started giving rich dividends". India is the world's fastest-growing economy and expanding more quickly than China, which reported 6.7% economic growth in the second quarter.

The manufacturing and construction sectors were among those that grew at more than 7% during the quarter, the government said. This means GVA also grew at 8 per cent. "Possibly the buoyancy in agriculture is because of the allied activities". This is the fourth consecutive quarter in which GDP growth has maintained an upward trajectory.

He said, "If you calculate the core GVA, which is basically the private sector, that has actually surged to 8.1 percent as against 7.2 percent".

Last year, India's GDP growth was at 5.6 per cent in the same quarter.

Union minister Piyush Goyal, who had held held the finance portfolio in absence of Arun Jaitley- who has resumed his duties - termed the growth rate "phenomenal".




P Chidambaram, however, expressed happiness at the quickened rate of growth recorded in the first quarter of current fiscal.

In a dig at the preceding UPA government, he said the economy was in shambles when Modi took over but an unfazed NDA, the entire Cabinet, "single-mindedly" focussed on putting India back on track. While this isn't the official so-called back series, it was immediately pounced upon by the Congress, which lead the United Progressive Alliance government at the time this growth was achieved. While impressive growth performance in agriculture and construction is a welcome trend given the high labour intensity of these sectors, services recording a lower than average growth is an important development, Sen added.

"Growth will be stronger in the first half compared to the second as the favourable base effect will begin to wear off after the second quarter", noted Joshi.

From the expenditure side, the composition of GDP remained broadly the same during Q1 2019 and Q1 2018, with private consumption accounting for 55% of the total GDP.

She added, "But (GDP growth rate) still this suggests that the turnaround is there and that there is an intrinsic resilience in the economy because despite zero macro-economic stimulus and external stresses, we are doing well". This shows that inflationary pressures might be stronger than what is captured by the benchmark index, Sen added.

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