01 Jun 2016 13:00 IST

At 7.9% in Q4, India is still ‘fastest growing’ economy

GDP expansion, at 7.6%, hits five-year high in FY16; core sector upbeat in April

Tuesday brought more cheer to the NDA government celebrating its two years in office. Two critical macro data points — GDP growth and core infrastructure performance — pointed to an economy firing on all cylinders.

Cementing India’s pole position as the fastest-growing large economy, the country’s fourth-quarter GDP growth stood at a higher-than-anticipated 7.9 per cent, official data showed.

Powered by a strong show in refinery products’ output and electricity generation, the eight core sector industries’ saw output growth of 8.5 per cent in April 2016. This was higher than the 6.4 per cent in March 2016, and a contraction of 0.2 per cent in April 2015.

The March quarter growth of 7.9 per cent is the best quarterly performance for the economy in 2015-16, and much higher than the revised 7.2 per cent expansion for October-December 2015. The economy expanded at 7.5 per cent and 7.6 per cent in the first and second quarters, respectively.

For full year, the economy grew at a five-year high of 7.6 per cent, in line with the Central Statistics Office’s (CSO) advance estimates of 7.6 per cent in February. India continues to maintain its lead over China which, grew 6.7 per cent in January-March 2016.

Rich harvest

As expected, agriculture witnessed a revival in the March quarter, registering a 2.3 per cent growth, against a contraction of 1.7 per cent in the same quarter last fiscal. A good rabi harvest and some base effect aided this performance.

For the entire 2015-16, the sector grew 1.2 per cent, a tad above the 1.1 per cent growth put out in the advance estimates in February. This upward revision is on account of the third advance estimates of crop production released by the Agriculture Ministry, the CSO said.

As per the third advance estimates, foodgrains production was 252.23 million tonnes in 2015-16, higher than the tentative estimate used for compiling the advance estimates.

Encouraged by the strong numbers of 2015-16, the Finance Ministry on Tuesday said it expected GDP growth rate to go up to 8 per cent in 2016-17. “We should work toward seeing this (GDP growth) number grow. We are focusing on capital spending in infra and social spending,” Finance Secretary Ashok Lavasa said. “The monsoon will help agriculture production boost rural spending and productivity.”

The Finance Ministry also said in a statement that fiscal parameters are robust and in line with Budget projections for 2015-16.

Fiscal deficit ‘on target’

Economic Affairs Secretary Shaktikanta Das tweeted that the fiscal deficit of 3.9 per cent achieved in 2015-16 was “bang on target”. Revenue deficit of 2.5 per cent was better than the 2.9 per cent in 2014-15, pointing to effective budget and fiscal management by the government.

Manufacturing grew 9.3 per cent in fourth quarter, against 6.6 per cent growth in the same quarter last fiscal. For 2015-16, the sector grew 9.3 per cent against 9.5 per cent in the advance estimates. Corporate sector growth — which has a share of around 69 per cent in the manufacturing sector — as estimated from available data of listed companies with BSE and NSE, stood at 10 per cent during the fiscal.

The mining sector grew 8.6 per cent in the fourth quarter against 10.1 per cent in the same quarter last fiscal. For the fiscal, the sector grew 7.4 per cent, higher than the 6.9 per cent growth in the advance estimates. The upward revision is mainly due to the use of latest available private corporate results.

What experts say

The latest data point to an economy on recovery path, said Anis Chakravarty, Lead Economist and Partner, Deloitte in India. However, while consumption was moving up, investment levels were still low, he added.

Aditi Nayar, Senior Economist, ICRA Limited, said healthy corporate earnings in some sectors in the just-concluded quarter supported manufacturing gross value added growth, despite the dip in volumes revealed by the Index of Industrial Production.

Detailed reports p4