While the disappointing fall of India’s GDP growth to 5.7% in the fiscal first quarter April-June pit the country behind China on the list of the fastest growing major economies, there seems to be a reason to cheer now, with the OECD’s leading indicator showing that the Indian economy is not just recovering but is also gaining momentum. Albeit, again to the disappointment of the die-hard nationalists, China is growing at a much faster rate.
The Composite Leading Indicators (CLIs) designed by the Organisation for Economic Co-operation and Development show that the Indian economy recovered in June and July from an economic slowdown in March and April this year, which was apparently caused by uncertainty related to the GST rollout. India, which had hit a low of 99.39 points on the 100-point indicator in March and April this year, recovered in subsequent months, and gained momentum in July at 99.67 points, the CLIs showed.
Meanwhile China, which had hit its lowest at 98.99 in January this year, showed a steep rise and touched the 100-point trend line in July, making a recovery of 1.1 points in a span of just seven months.
Although, India’s growth is seen as speeding up, it continues to remain below the 100-point trend line unlike China. India had hit the trend line in February and March last year 2016. However, it soon started dipping, in March and April of this year 2017, and reached to its lowest level in the last two years, the data showed.
The 100-mark on the indicator represents the trend line of the economic activity based on the quarterly GDP estimates of a country. CLIs use the method to provide fluctuation in the economic activity around its long term potential level. Before April 2012, CLIs used the index of industrial production (IIP) as a reference. The latest CLIs data is available for the month of July.
A Nomura research report on Wednesday also said that India’s GDP is likely to pick up post-GST restocking. “Overall, we expect GDP growth of 7.1 per cent year-on- year and gross value added (GVA) growth of 6.7% in 2017-18 (year ending March 2018),” PTI quoted Nomura as saying.