GDP revival puts India back on front run

India regained the status of the world’s fastest growing economies after recording an economy growth rate of 7.2 percent in the third quarter of 2017-18.

The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation, released the Second Advance Estimates of National Income, 2017-18 and Quarterly Estimates of Gross Domestic Product (GDP) for the third quarter of FY 2018.

The GDP rebounded to 7.2 percent in the third quarter of FY 2018 from 6.5 percent in the second quarter and 5.7 in the first quarter, thus registering the fastest growth rate in five quarters. The overall growth reflected a recovery backed by the strong movement in  industrial activity, especially in the manufacturing and construction sector, shrugging off the effect of demonetisation and Goods and Services Tax (GST).

The Gross Value Added (GVA) is expected to grow 6.4 percent in 2017-18 as against 7.1 percent in 2016-17. The GVA in the agriculture, forestry and fishing sector grew 4.1 percent, manufacturing 8.1 percent, construction 6.8 percent and financial, real estate and professional services 6.7 percent in the third quarter of FY 2018.

The second advance estimation for the annual economic growth also inched up marginally. The economy is now expected to record a growth rate of 6.6 percent from the earlier estimation of 6.5 percent. The country had recorded a growth rate of 7.1 percent in 2016-17.

The Index of Eight Core Industries also improved to 6.7 percent in January 2018 as against January 2017. Of the eight sectors, five registered a positive growth. At the same time, cement production recorded an impressive growth rate of 20.7 percent year-on-year in January 2018, and petroleum refinery production increased by 11.0 percent.

Fertilizers production declined by 1.6 year-on-year in January 2018. The cumulative growth of Eight Core Industries during April to January 2017-18 was 4.3 percent.

However, the nation’s fiscal deficit surpassed the target for the entire FY 2018 on the back of higher expenditure. India's fiscal deficit stood at 113.7 percent of the target for the entire fiscal reaching Rs 6.77 lakh crore at the end of January 2018.

As per data released by the Controller General of Accounts (CGA), the fiscal deficit was pegged at Rs 5.33 lakh crore or 3.5 percent of the GDP for FY 2018. Later, the figure was revised to Rs 5.95 lakh crore in the Union Budget 2018-19.

The revenue deficit touched Rs 4.80 lakh crore, a 109.2 percent of the government’s full year estimate.

Overall, easing the effect of demonetisation and GST, India's GDP is expected to accelerate further in FY 2019.