Published: Sat, September 01, 2018
Markets | By Erika Turner

At 8.2%, GDP grows at its quickest pace in 2 years

At 8.2%, GDP grows at its quickest pace in 2 years

Sectors which registerd growth of over 7 per cent include "manufacturing, "electricity, gas, water supply & other utility services" "construction" and 'public administration, defence and other services". "India is witnessing an expansion of the neo middle class".

To be sure, there is an element of base effect in the latest growth figures.

Manufacturing remained the best of the lot with its quarterly GVA at basic prices for the quarter growing by 13.5 percent as compared to growth of (-) 1.8 per cent in corresponding quarter previous fiscal.

The services sector grew at a slightly slower pace of 7.3 per cent in Q1FY19, down from 7.7 per cent in Q4FY18.

He said, "If you calculate the core GVA, which is basically the private sector, that has actually surged to 8.1 percent as against 7.2 percent". "Oil prices at current levels will raise expenditures and add to existing pressures on the fiscal position stemming from the lowering of goods and services tax (GST) rates on a range of consumer goods and a tax cut for small businesses as well as the relatively high minimum support prices (MSPs) set for this year", Moody's said.

Subhash Garg, the economic affairs secretary, told reporters the government will stick to the fiscal deficit target of 3.3 percent of GDP this fiscal year. But it rose as a share of GDP. "We may have to wait to see if this can be sustained as often there are slippages subsequently", noted Sabnavis.

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While the growth numbers for the first quarter are encouraging, analysts remain sceptical about the economy maintaining this growth trajectory in the coming quarters.

"We expect RBI to hike rates in March-quarter next year with no changes this year", he said.

Other economists concurred, though not the government.

He also gave a tabulated data showing that the GDP was 8.1 per cent in the first quarter of 2016-17, which declined to 7.6 per cent in the second quarter, declining further to 6.8 per cent and 6.1 per cent in the third and fourth quarter of 2016-17. Manufacturing growth in Q1 2018 had gone into negative territory.

These estimates represent a significant jump from last year's Q1 growth rate estimates of 5.6 per cent, indicating superior acceleration in India's growth trajectory, noted the Economic Advisory Council to the Prime Minister. The favourable base effect this time around has prompted economists to caution that 8%-plus growth doesn't seem likely for the net three quarters.

Ministry of Statistics and Programme Implementation said, "Quarterly GVA at basic prices for Q1 2018-19 from "manufacturing" sector grew by 13.5 percent as compared to growth of (-) 1.8 percent in Q1 2017-18".

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