India’s Q4 GDP growth to bulldoze naysayers? Economic growth seen jumping to highest in 2 years to 7.7%

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Updated: May 14, 2018 2:18:11 PM

The financial year 2017-18 began with a disappointing GDP growth figure of 5.7% as the twin shock of demonetisation and the GST took the toll. But it may end on a cheerful note.

India’s Q4 GDP growth to bulldoze naysayers? Economic growth seen jumping to highest in 2 years to 7.7%India?s GDP is expected to clock a 7.7% growth in the January-March quarter of FY18

The financial year 2017-18 began with a disappointing GDP growth figure of 5.7% as the twin shock of demonetisation and the GST took the toll. But it may end on a cheerful note. India’s Gross Domestic Product (GDP) is expected to clock a 7.7% growth in the January-March quarter of FY18, highest in two years, says a Nomura report.

Despite the moderation in factory output growth in March, India’s GDP growth in the quarter ended March is expected to be highest since April 2016 — the pre DeMo and GST era. However, the slower growth in the first two quarters could bog down the full-year GDP growth, which by CSO advance estimates is going to be 6.6%. This will be the lowest level since Narendra Modi was elected to power in 2014.

The Narendra Modi government faced sharp criticism when India’s economic growth slowed to 7.1% in FY17 and a three-year-low 5.7% in the first quarter of FY18 due to the aftermath of demonetisation and destocking ahead of the implementation of the Goods and Service Tax (GST). However, soon, the growth rebounded to a 7% plus level.

It may be recalled that while India’s GDP growth in the third quarter of FY18 was expected to grow at 6.9% when the actual figure came, it was higher by 0.3 percentage points at 7.2%. Recently, the Reserve Bank of India expressed worry over India’s GDP estimates, saying that Central Statistics Office (CSO) usually tend to “understate” the growth of the Indian economy.

Economists are highly optimistic about India’s economic growth in next two years too, which is going to make India a fastest growing economy again. The Nomura report noted that India is expected to witness cyclical recovery led by both investment and consumption. Although, factors like rising oil prices as well as tighter financial conditions are expected to drag down growth rates.

The World Bank predicts India’s GDP growth to be 7.3% in the current year 2018 and 7.5% in 2019. The GDP data for the fourth quarter is scheduled to be announced on May 31 by the CSO.

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