Uncertain jobs data, strained agriculture, lower investments: Is Indian economy really looking up?

By: | Published: August 29, 2018 6:14 PM

n the same period last year, India clocked a three-year-low GDP growth rate of 5.7%, majorly due to massive de-stocking ahead of the implementation of the Goods and Services Tax (GST).

For the current financial year so far, there are mixed signals on the state of the real economy, said Care RatingsFor the current financial year so far, there are mixed signals on the state of the real economy, said Care Ratings

There is a definite indication of a higher GDP growth in the first quarter of the financial year 2018-19 as compared to the same period last year but the key indicators are likely to display a better picture as they are pitted against a different year which witnessed slowdown due to disruptions caused by the GST before sharp rebound, a report has observed.

In the same period last year, India clocked a three-year-low GDP growth rate of 5.7%, majorly due to massive de-stocking ahead of the implementation of the Goods and Services Tax (GST). Rating and financial institutions are expecting the GDP growth rate in the April-June quarter of the current financial year to be between 7.5% to 7.7%.

“FY18 was different in terms of the operating environment as GST had caused some degree of upheaval with the growth pattern moving into a trough before rising sharply. This was witnessed in GDP growth as well as industrial growth which in turn will tend to display a better picture this year,” a report by Care Ratings said.

“For the current financial year so far, there are mixed signals on the state of the real economy,” the report said. While praising the performance of FDI inflows and better trade numbers, Care Ratings expressed worry over indications of unclear employment scenario, strained agriculture, and lower investments.

“The employment scenario appears unclear given the different contrary indications given by the EPFO and CMIE data,” the report said. On investments, it said that while the picture on domestic investment intentions is still a bit nebulous, the FDI flows have been more positive and definite with growth of 22% in the first quarter from $10.4 billion to $12.7 billion.

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