The economy — which grew 7.7% between January and March from a year earlier — can achieve double-digit expansion as early as the fourth quarter of the current fiscal, aided by a pick-up in demand, interim finance minister Piyush Goyal said on Monday. He also said the Centre will take all steps to contain fiscal deficit within the target of 3.3% for 2018-19, against 3.5% a year earlier, “despite 2019 being an election year”. Asked when India would reach the inflection point for double-digit growth, Goyal said: “… we can actually see it happening by the fourth quarter of this year. It’s not impossible.” There is a rise in demand in the economy and India is a market-place of billions of aspirational consumers, he said at a CII event. “I think the government has been trying to make it easier to do business…. And when this country becomes a nation of honest businesses, then a 10%-plus growth is a given for us,” he added.
Economic growth has never touched 10% in any quarter since the new methodology to compute national income was adopted, with 2011-12 as the base year, and the highest quarterly expansion witnessed so far is 9.3% (in the fourth quarter of 2015-16). GDP growth dropped to a four-year low of 6.7% in 2017-18 but the 7.7% expansion in Q4 last fiscal – the highest in seven quarters – suggested the economy weathered the residual impact of the note ban and the goods and services tax regime. Concerns, however, remain as the pick-up in private investments is far from being robust and private consumption is not exactly looking up. Also, among the high-frequency data, there is no real convergence to suggest a strong economic recovery. Sequentially, growth has been higher by 70 basis points in each of the past three quarters. This also means the fourth quarter of 2018-19 will have a relatively unfavourable base for the calculation of GDP growth.
The International Monetary Fund has predicted India’s 2018-19 growth to be 7.3%. Addressing Niti Aayog’s governing council meeting on Sunday, Prime Minister Narendra Modi had said that the challenge before India was to take the economic growth rate to double-digits for which many more steps need to be taken. The finance ministry, in March, had said India was poised to double the size of its economy to $5 trillion by 2025. As for fiscal deficit, Goyal said the government will maintain financial discipline and stick to the target even without cutting productive expenditure. “I can assure that we will meet the fiscal deficit target of 3.3%, despite this being an election year,” he said. Fiscal deficit in 2017-18 touched 3.53% of GDP in 2017-18, higher than the initial target of 3.2%. The government has said the slippage would have been bridged had the government factored in a full-year GST collection, instead of that of 11 months in the first year of its launch following the introduction of a new accounting system.