India’s Q4 GDP grows at stellar 7.9% versus 7.2% in Q3; good news for Modi government

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Updated: May 31, 2016 6:29:49 PM

India's Q4 GDP grew at a robust 7.9% as against 7.2% (revised from 7.3% earlier) in Q3 of FY16.

GDPQ4 GDP data: India has managed to retain its tag of world’s fastest growing economy, giving PM Modi more to celebrate after completing two years in office. (Reuters Photo)

India’s GDP grew at a robust 7.9% in the fourth quarter of the financial year gone by as against 7.2% (revised from 7.3% earlier) in Q3 of FY16. The government revised GDP growth data for Q2 and Q1 of FY16 to 7.6% versus 7.7% and 7.5% versus 7.6% respectively.

With such a high growth number, India has managed to retain its tag of world’s fastest growing economy, giving Prime Minister Narendra Modi more to celebrate after completing two years in office last week.

Real GDP or GDP at constant (2011-12) prices for the year 2015-16 is now estimated at Rs 113.50 lakh crore (Rs 113.51 lakh crore estimated earlier on 8th February, 2016), showing a growth rate of 7.6 percent (similar to 7.6 percent estimated earlier) over the First Revised Estimates of GDP for the year 2014-15 of Rs 105.52 lakh crore, released on 29th January 2016.

The agriculture, forestry and fishing sector has shown a growth rate of 1.2 per cent, as against the growth rate of 1.1 per cent in the advance estimates. The mining and quarrying sector has shown a growth rate of 7.4 per cent, as against the growth rate of 6.9 per cent in the advance estimates.

The growth in the manufacturing sector is estimated at 9.3 per cent as against the growth rate of 9.5 per cent in the Advance estimates.

Growth in the March quarter was driven by a rebound in farm output, an improvement in mining and a sharp pickup in electricity production.

The farm sector grew by 2.3 percent from a year ago compared with a 1.0 percent contraction in the December quarter.

With good rain forecast, after two successive years of drought, farm sector output should improve in coming months and lift depressed demand in the countryside where two-thirds of Indians live.

Electricity, water and gas production growth jumped to 9.3 per cent from 5.6 per cent in the December quarter.

Adding to the economic data cheer, infrastructure output grew at an annual 8.5 percent in April, at its fastest pace in 17 months, mainly helped by a favourable base effect.

The output expanded 2.7 percent for the fiscal year 2015/16 that ended on March 31, compared with a 4.5 percent growth in the previous fiscal year.

India’s upbeat outlook contrasts with neighbouring China, where growth slipped to 6.7 in the first quarter – the slowest posted by the world’s second largest economy in seven years.

Meantime, the Reserve Bank of India (RBI) is widely expected to keep its policy interest rate on hold at a scheduled policy review on June 7 as it waits for banks to fully pass on the previous the benefits of earlier cuts to borrowers.

With good rains forecast this summer, the farm sector is set to get a fillip after two successive years of drought. That bodes well for depressed rural demand.

(With inputs from Reuters)

 

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