Q3 growth marks India's return as fastest growing economy: Finmin

Q3 growth marks India's return as fastest growing economy: Finmin

Q3 growth marks India's return as fastest growing economy: Finmin

India's economy grew a strong-than-expected 7.2 percent in the three months ending in December from a year earlier, faster than an upwardly revised 6.5 percent in the previous quarter, government data showed on Wednesday.

India's economy grew by 7.2 percent in the third quarter of the financial year, official data showed Wednesday, as the after-effects of high-profile fiscal initiatives faded.

Prime Minister's Economic Advisory Council Chairman Bibek Debroy said the economy was on the right track and the current expansion in the growth rate suggests that the reforms initiated by the government had started showing results.

Market watchers said that the December quarter growth was likely driven by increased consumption and higher exports.

According to CSO, the sectors which are likely to register growth rate of over 7% - are "public administration, defence and other services", "trade, hotels, transport, communication and services related to broadcasting", "electricity, gas, water supply and other utility services" and "financial, real estate and professional services".

The bottomline is that India is in high growth mode. The slowdown was reversed during the third quarter of 2017 in part because of a recovery for the construction sector which grew by 6.8%.

"Importantly GST disruption is seen waning as borne out by manufacturing sector growth at 8.1 percent in October-December vs 6.2 percent in July-September". That beat China's 6.8 percent and a forecast of 6.9 percent by analysts polled by Reuters. "The IIP (Q-o-Q % change) grew at 4.38 percent in December 2017 as compared to 0.50 percent in September 2017", Dr Debroy added.

The improvement comes as India's manufacturers and service industries have been overcoming disruptions from the bumpy launch of a national sales tax in July.

All this may be seen as a reaffirmation of an upward trend in growth in the next fiscal with agencies such as the International Monetary Fund and the World Bank besides the RBI, credit rating agencies and other forecasters, estimating that India could grow at well over 7.2 per cent in 2018-19.

"We have to also understand that the figures for the informal sector which saw huge lay-offs and shut-down of manufacturing units have not been counted and once that is done, these growth figures will have to be discounted", he added. Furthermore, the cumulative growth in the eight core sectors during April-January this fiscal slowed to 4.3 percent as against 5.1 percent in the same period last fiscal.

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