India grew fastest in world
New Delhi: The Indian economy gathered momentum bet-ween January to March 2016 growing at 7.9 per cent to remain the fastest expanding major economy in the world. With this the overall GDP for 2015-16 came at five years high of 7.6 per cent against 7.2 per cent growth in the previous year due to a good show by the manufacturing and farm sectors.
This has raised hopes in the Modi government that India will touch eight per cent in the current fiscal. “Going forward, the outlook is very positive. A good monsoon and the passage of GST constitutional amendment will take us to eight per cent growth in 2016-17,” said economic affairs secretary Shaktikanta Das.
The positive data has come a week before Prime Minister Narendra Modi’s visit to the US, where he will meet foreign investors and global CEOs. And being the fastest growing economy will certainly expected to help in raising the country’s profile among the investor community.
According to the data, the agriculture sector grew by 1.2 per cent in 2015-16 as against a contraction of 0.2 per cent in 2014-15, despite the second consecutive monsoon shortfall. The sector’s growth was bolstered by a five per cent growth of the non-crop sectors. The manufacturing sector grew by at 9.3 per cent in the FY16 against a 5.5 per cent in the previous year.
During the fourth quarter, the farm sector grew by 2.3 per cent on the back of a good Rabi harvest, which bodes well for the rural consumption in the quarters ahead. However, the manufacturing growth in the fourth quarter slowed down at 9.3 per cent against a growth of 11.5 per cent in the third quarter of FY16.
“This latest set of data points 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 in the economy. In fact, gross fixed capital formation registered a decline in Q4FY16 as compared to the level a year ago,” said Anis Chakravarty, Lead Economist and Partner, Deloitte.
He said that the revival of investment is more likely to be driven by the government’s push. “The overall narrative for the ongoing fiscal remains contingent on the fate of monsoons and overall demand levels in the economy,” said Mr Chakravarty.
“While headline GDP growth recorded a moderate uptick in FY16, the key disappointment was the step down in investment growth to 3.9 per cent from 4.9 per cent,” said Aditi Nayar, senior economist at ICRA.