India’s GDP Rises To 7.2% In December Quarter, Surpasses China GDP Of 6.8%
According to a recent report, 7.2% growth has been recorded in India’s Gross Domestic Product (GDP) leaving behind China’s 6.8 percent over the same period, an improvement from 6.5% growth reported in the last quarter.
The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation has released the Second Advance which reported India’s Gross Domestic Product (GDP) growth accelerated to 7.2% of the quarter ended December 2017.
These numbers point towards the recovery of India’s economy from the plunge in the first half of 2017 when growth fell from 7% to a three-year low of 5.7% after the unprecedented decisions taken by the PM Modi’s BJP-led government.
What led to the decline of growth?
The country was stunned in November 2016 when Modi announced the demonetization of high-value currencies which leads to a sharp slump in many sectors of India’s cash economy and later in another landmark reform of the tax system by introducing the Goods and Services Tax (GST) in July last year which also disrupted business.
The full year’s growth has been revised upwards to 6.6%, based on Q3 GDP data based on the second advances estimates from 6.5% at first advance estimate released in early January 2018. Considering the GDP growth rate, by the end of March the size of the Indian economy is projected to grow to $2.6 trillion.
India is also expected to further stretch the gap over China with the predicted growth of 7.4% in 2018 and 7.8 percent in 2019, outlined by the International Monetary Fund in a report published last month.
In the data released by CSO, showed the economic activity strengthening across the sectors except mining and quarrying. While the manufacturing output surged 8.1%, agriculture, forestry, and fishing sector showed improved growth of 4.1%; the services sector growth also improved to 7.7% and industrial area to 6.8% in Q3 of 2017-18. Within the industrial sector, construction 6.8% and utilities 6.1%, but mining sector output fell 0.1%. Among the services sector component, public administration, defence, and other services 7.2%, the output of trade, transport, hotels, communication and services related to broadcasting jumped 9.0% and real estate, financial and professional services 6.7%, in Q3 of 2017-18.
Showing improvement in growth from 6.2% in Q2 of 2017-18, Quarterly Gross Value Added (GVA) also rose at an improved pace of 6.7% in Q3 of 2017-18 as against 7.1% in the year-ago period.
Remarkably, a gross fixed capital formation which is an indicator of investment demand in the economy registered a significant increase of 12%. Private final consumption also expenditure grew at 5.6% while the government final consumption expenditure was up at 6.1%.
In a statement given by the Finance Ministry robust growth in manufacturing and significant acceleration in construction is being considered as a push to the country’s economic growth momentum.
The boost also comes as a welcome relief for the Modi government after failing to prevent a $1.8bn fraud at the state-owned Punjab National Bank in which his administration has been facing criticism.