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Reflecting a slowing economy, India's growth rate declined to 7 per cent in the first quarter of 2015-16 even as the core sector output sputtered to a three-month low of 1.1 per cent in July. The fiscal deficit hitting almost 70 per cent of the Budget Estimate deepened the gloom.
Yet, India remained a rare bright spot in the world economy, doing better than trouble spots such as Brazil, Russia and South Africa.
The first quarter GDP growth was higher than the 6.7 per cent recorded in the same quarter last fiscal but lower than the 7.5 per cent recorded in January-March quarter this year.
Govt upbeat The Modi-led Government is hopeful that the economy will grow near the 8 per cent level for the entire fiscal, although the Reserve Bank of India and international rating agencies such as Moody’s do not share this optimism.
Despite ample evidence of stress in the industrial sector and a disappointing agricultural performance, the economy’s growth came on the back of a strong performance in the construction and services sector, official data released by CSO on Monday showed.
The new way of measuring GDP also helped despite gross value added (GVA) for the quarter under review coming in lower at 7.1 per cent against 7.4 per cent in the same quarter last year. The robust 17 per cent increase in tax collections in April-June quarter and a tight lid on subsidy helped boost the overall growth performance.
The Central Statistics Office had in February this year changed the way GDP is measured by adopting the concept of GVA and expanding the universe of companies taken up for calculation of economic growth. To compute the GDP, taxes are added to GVA and subsidies are netted out.
For investors worried about emerging market economies, the latest growth number should provide some cheer.
This is especially so when seen in the backdrop of fears around the cooling Chinese economy and the related global stock market turbulence witnessed last week.
Monday also saw the government release two important data sets — core sector performance for July and fiscal deficit data for the April-July period.
Other data The fiscal deficit for April-July 2015 stood at ₹3.85-lakh crore, or 69.3 per cent of the Budget Estimate.
In the first four months last fiscal, the fiscal deficit level was at 61.2 per cent of the Budget Estimate.
The eight core industries’ output growth for July came in at 1.1 per cent, much lower than 3 per cent growth seen in June this year and 4.1 per cent in July last year.
The July output performance was weighed down by a weak showing in the coal and steel sectors, although fertilisers and electricity bucked the trend to record robust growth.
The eight core industries — coal, cement, steel, refinery products, electricity, crude oil, natural gas and fertilisers — account for 38 per cent of the Index of Industrial Production.
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