Published: Mon, September 03, 2018
Markets | By Erika Turner

P Chidambaram Predicts Decline Of GDP Growth Prospects For Next Year

P Chidambaram Predicts Decline Of GDP Growth Prospects For Next Year

New Delhi, Aug 31 With the Indian economy registering a GDP growth of 8.2 per cent in the first quarter of the current fiscal, Union Finance Minister Arun Jaitley on Friday said that it represented the potential of a "New India" in an environment of global turmoil.

Finance Secretary Hasmukh Adhia said the GDP growth rate of 8.2 per cent for the April-June quarter of fiscal year 2018-19 indicates clearly that several structural reforms introduced such as Goods and Services Tax have started giving rich dividends.

The estimates on the growth strengthened India's position as the fastest growing major economy, pushing higher expansion rate than China's 6.7 per cent in the same April-June quarter of 2018.

The numbers cement India's position as the world's fastest-growing major economy, outpacing China - where an intensifying trade conflict with the USA has dimmed the outlook. The growth had slipped to 5.6 per cent in the same period last fiscal. We expect some tempering of growth going ahead due to base effect as well as from global headwinds including crude oil prices. Q1 growth rate is based on the lowest base (5.6) in the last 8 quarters.

Assocham President Sandeep Jajodia said the first quarter GDP numbers augurs very well for the entire fiscal Final Year 2018.

The Bank expected the economy to accelerate to 7.4 per cent in FY19 from 6.7 per cent a year ago.

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Debroy added that despite an uncertain worldwide environment and volatile crude oil prices, India's sustained growth reflects its strong resilience to adverse global conditions, because of strong economic fundamentals.

India's $2.6 trillion economy surpassed France's in 2017 to become the world's sixth largest, and it was not far behind the United Kingdom, according to World Bank data.

Greater government spending has given households more money to buy consumer durables, which helped the manufacturing sector post 13.5 percent growth in June quarter, in sharp contrast to the 1.8-percent contraction recorded a year earlier. Diesel prices increased by Rs 0.30 per litre from Rs 74.24 to Rs 74.54. IIP manufacturing registered a growth rate of 5.2 percent during the first quarter of 2018-19 as compared to 1.6 per cent during first quarter of 2017-18.

GVA includes taxes but excludes subsidies. "Investments will also continue to look up driven by government-led efforts to get roads and houses built, but a broad-based investment recovery led by the private sector is hampered by capacity overhang, high leverage, and political uncertainty". Merchandise import growth has slowed because of gold imports, while export growth has also weakened.

Gross Fixed Capital Formation (GFCF), a useful metric to measure corporate investment activity, grew 10.0 percent in April-June.

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