Tuesday brought more birthday cheer to the NDA government that has just completed two years in office. Two critical macro data points—GDP growth and core infrastructure performance—released on Tuesday reflected a rosy picture of an economy that was firing on all cylinders.

Cementing India’s pole position as the fastest growing large economy in the world, the country’s fourth quarter GDP growth stood at a higher-than-anticipated 7.9 per cent, official data showed.

Powered by a strong show in refinery products’ output and electricity generation, the eight core sector industries’ saw output growth of 8.5 per cent in April 2016. This was higher than 6.4 per cent growth in March 2016 and contraction of 0.2 per cent in April last year.

The March quarter GDP of 7.9 per cent was the best quarterly growth performance for the Indian economy in 2015-16, and was much higher than the downward revised 7.2 per cent growth in October-December 2015. Indian economy had recorded 7.5 per cent and downward 7.6 per cent growth in first and second quarter, respectively.

For the entire 2015-16, the economy grew at a five-year high of 7.6 per cent, in line with the Central Statistics Office (CSO) advance estimate of 7.6 per cent in February this year.

India continues to maintain its lead over China, which as the world’s second largest economy grew 6.7 per cent in January-March 2016.

AGRI BOOST

As expected, agriculture revived in March quarter registering 2.3 per cent growth, against contraction of 1.7 per cent in the same quarter last fiscal. A good Rabi harvest and some base effect aided this performance.

For the entire 2015-16, the sector grew 1.2 per cent, a tad above 1.1 per cent growth put out in the advance estimates in February this year. This upward revision is on account of use of third advance estimates of crop production released by the Agriculture Ministry, the CSO said.

As per the third advance estimates, foodgrain production was 252.23 million tonnes in 2015-16, higher than the tentative estimate used for compiling the advance estimates.

FINMIN THRILLED

Encouraged by strong GDP growth in 2015-16, the Finance Ministry on Tuesday said it expected GDP growth rate to go up to 8 per cent in the current financial year.

“We should work toward seeing this (GDP growth) number grow. We are focusing on capital spending in infra and social spending,” Finance Secretary Ashok Lavasa said.

“Monsoon will help agriculture production boost rural spending and productivity, he said, adding that “we should hope for things to be better. Parameters are looking good”.

The Finance Ministry also said in a statement that fiscal parameters are very robust and in line with the Budget projections for 2015-16.

“Together with GDP growth of 7.9% in Q 4 of 2015-16 and 7.6% in the whole of 2015-16, India continues to remain a bright spot in world economy with robust macro economic and fiscal parameters”, the statement added..

Meanwhile, Economic Affairs Secretary Shaktikanta Das tweeted that fiscal deficit of 3.9 per cent achieved in 2015-16 was “bang on target”. Revenue deficit of 2.5 per cent was better than 2.9 per cent in 2014-15, pointing to effective budget and fiscal management by the government.

MANUFACTURING

Manufacturing grew 9.3 per cent in fourth quarter, against 6.6 per cent growth in same quarter last fiscal. For the entire 2015-16, the sector grew 9.3 per cent, against the growth of 9.5 per cent in the advance estimates.

Private corporate sector growth (which has a share of around 69 per cent in the manufacturing sector), as estimated from available data of listed companies with BSE and NSE, was at 10 per cent at current prices during 2015-16.

The mining sector, too, recorded a growth rate of 8.6 per cent in the fourth quarter, against 10.1 per cent growth in same quarter last fiscal. For the entire 2015-16, the sector grew 7.4 per cent, higher than 6.9 per cent growth in the advance estimates. The upward revision is mainly on account of use of latest available private corporate results.

EXPERTS’ TAKE

Anis Chakravarty, Lead Economist and Partner, Deloitte in India, said the latest data point to an economy that is still on the path to recovery but is showing signs of growth in certain sectors. However, the figures also showed that while consumption was moving up, investment levels were still low, he added.

With crude oil moving up and a possible Fed rate hike on the horizon, the Reserve Bank of India is likely to be on hold in its upcoming policy, Chakravarty said.

Aditi Nayar, Senior Economist, ICRA Limited, said healthy corporate earnings in some sectors in the just-concluded quarter supported manufacturing gross value added growth, despite the decline in volumes revealed by the Index of Industrial Production.

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