India’s economy grew faster than China’s in the quarter through March, according to official data records.
Union Finance Minister Arun Jaitley hailed the new figures as a recovery of the economy.
“It’s absolutely clear that economy is in a recovery mode. I say that because the services sector has significantly improved, it’s doing well. What seems o be silver lining is that manufacturing sector is now growing. This coupled with the revenue figures of April 2015 holds out a hope for a growth in manufacturing sector,” said a confident Jaitley.
Meanwhile, Finance Secretary Rajiv Mehrishi said that the encouraging part of the data is the growth in manufacturing to 7.1 percent from last year’s 5.3 percent.
“The growth is 7.2 percent at basic prices and 7.3 percent at market prices. This is in spite of a decline in agriculture growth from 3.7 percent to 0.2 percent. The encouraging part of the data is the growth in manufacturing to 7.1 percent from last year’s 5.3 percent which would also mean that we are creating jobs in our growth path,” said Mehrishi.
Economists are already having a hard time reconciling the headline numbers with dismal corporate earnings, weak industrial activity and an elusive recovery in bank credit.
Back in December, the government estimated growth for the year would be 5.5 percent using the old methodology. That would have represented a modest improvement after two successive years of growth below 5 percent – the worst in a quarter century.
But the Central Statistics Office’s reworking of the numbers has transformed the official growth pace under Prime Minister Narendra Modi, who made economic reforms a priority during his first year in office.
The new method measures economic activity by market prices instead of factor costs, to take into account gross value addition in goods and services as well as indirect taxes.