Published: Mon, June 04, 2018
Global Media | By Derrick Guzman

March quarter GDP growth fastest in 2 years; Dalal Street cheers

March quarter GDP growth fastest in 2 years; Dalal Street cheers

"We expect GDP growth of about 7.3 per cent in 2018, down from our previous forecast of 7.5 per cent", the report said.

For the fiscal year that ended March 31, the Ministry of Statistics reported growth of 6.7 percent, down from 7.1 percent for a year earlier.

The gross domestic product (GDP) in the March quarter remained higher than market expectations - the highest in seven quarters - even as the overall growth of 6.7 per cent during the year was the lowest in last four fiscal years, Devendra Pant, Chief Economist at India Ratings, said.

The farm sector also grew at a healthy rate of 4.5 per cent, while construction activity, powered by government investments in the highways sector, clocked a double digit growth of 11.5 per cent to give a fillip to the economy.

The fourth quarter GDP number is the highest since demonetisation in November 2016.

As compared to India's outstanding performance, China Grew at 6.8% in the January to March Quarter. "On balance, GDP and GVA growth are expected to improve to 7.1% and 7.0%, respectively, in FY2019, from 6.7% and 6.5%, respectively, in FY2018".

"GDP at 2011-12 prices in the fourth quarter (Q4) of financial year 2017-18 registered growth rate of 7.7 per cent as against 5.6 per cent, 6.3 per cent and 7 per cent respectively, in the first three quarters, Q1, Q2 and Q3 of 2017-18". He emphasized that this is the development under leadership of Prime Minister Narendra Modi and Union Minister Arun Jaitley.

The growth in the "agriculture, forestry and fishing", "mining & quarrying", "manufacturing", "construction", and "financial, real estate and professional services" is estimated to be 3.4 per cent, 2.9 per cent, 5.7 per cent, 5.7 per cent and 6.6 per cent, respectively, the statement said. The moderation in growth was driven by impacts from successive policy shocks of demonetization and the Goods and Services Tax; and the twin balance sheet problem of high corporate leverage and banks' stressed balance sheets. However, we expect tighter financing conditions, rising oil prices and slower investments in the run-up to elections to slow GDP growth later in the year. Alongside, rising global trade tensions due to the imposition of import tariffs by the United States could moderate global trade growth, tempering Indian exports, analysts said. However, growth is likely to get a boost from monsoon rains, which hit Kerala a few days earlier than normal, potentially brightening the outlook for agricultural output.

The growth in GVA was widespread led by public administration, which saw growth of 13.3 percent year-on-year.

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