While India’s GDP grew at a slower clip in the 3 months to June, it is still the world’s fastest growing economy. In the first 6 months of CY2015, India’s national income grew 7.3% yoy compared to China’s 7%.
In July, the IMF had projected India will be the world’s fastest growing economy in 2015 at 7.5%, surpassing China’s 6.8%. Even next year, India will lead, at 7.5%, as China could slip to 6.3%.
China was the fastest growing economy in 2014 at 7.4%, against India’s 7.3%. However, the IMF projection for India is lower than the estimates of the finance ministry and RBI at 8-8.5% and 7.6%, respectively, for 2015-16.
The monsoon will be a critical factor this year. A recovery in September rainfall will boost agriculture, which grew just 1.9% in Q1FY16 as compared with 2.6% in the same quarter last fiscal. Also, private consumption expenditure growth moderated to 7.4% yoy in Q1FY16 from 7.9% in Q4FY15 because of weak rural demand. But capital expenditure grew from 4.1% yoy in Q1FY15 to 4.9% in Q1FY16.