India Inc lauds GDP numbers in Q4, expects trend to improve further

“On the domestic front growth should benefit from an acceleration in rural consumption supported by higher minimum support prices and a normal monsoon” Moody’s said

India clocks 7.7 per cent GDP growth for Q4FY18

According to the provisional estimates of national income, the growth rate of GDP at constant (2011-12) prices for the financial year 2017-18 was estimated at 6.7 percent, while, at the sectoral level, the growth rate of GVA at constant (2011-12) prices for agriculture and allied sectors, industry and services sectors for the year 2017-18 were estimated at 3.4 percent, 5.5 percent, and 7.9 percent respectively.

India's economy expanded 7.7 per cent year-on-year during the January-March quarter, recording the quickest pace of growth in almost two years.

The annual GDP growth for 2018-19 is projected at 7.4% by the participating economist; with a minimum and maximum range of 6.9% and 7.5% respectively. "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".

Finance secretary Hasmukh Adhia said, "The constant increasing trend of quarterly GDP numbers in 2017-18 indicates that the structural measures of reforms undertaken by government is now bringing rich dividends in the form of higher GDP growth rate".

For oil-importing India, the combination of a weaker currency and surging oil prices is a threat not only for the current-account deficit, but also inflation.

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The data may offer a boost to Prime Minister Narendra Modi, who is set to seek a second term next year. Faster growth in manufacturing, farm sector and construction helped this growth rate.

The 9.0% growth of capital goods and the expansion in the GoI's capital spending in January-February 2018 are likely to have contributed to the healthy expansion of gross fixed capital formation (GFCF) in the just-concluded quarter.

GVA includes taxes but excludes subsidies. India's growth performance in the third quarter and fourth quarter implies that these shocks have worn off considerably, stated ANZ.

Economists are predicting a further pick-up in activity during the current financial year on the back of higher consumption demand, a stable GST and a surge in investment towards end of the year. Possibly, the biggest risk could be rising crude oil prices, which this month hit $80 a barrel, their highest since 2014. Healthy topline and bottomline growth in the corporate sector, as well as buoyant cement and steel output point to an upturn in the business cycle. Higher oil prices have already pressured the rupee, near a record low last week and Asia's worst performer. The International Monetary Fund expects economic growth could reach 7.4 percent in 2018/19.

With the release of the latest figures, the country has again retained fastest-growing economy tag once again in the January-March quarter.

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