The country has reclaimed the tag of world's fastest-growing major economy, surpassing China, as it clocked 7.2% growth in the gross domestic product (GDP) for the October-December quarter of the current fiscal year, the government data showed on Wednesday. China had recorded a growth of 6.8% in the third quarter.
The latest numbers, boosted by higher spending and a pick-up in manufacturing and services, show that the economy has recovered from the impact of the demonetization and the good and services tax (GST) rollout, feel experts.
The growth numbers come as a relief to the government which has been facing criticism over rising bad loans and frauds at Punjab National Bank and other public sector banks.
As per the latest estimates, the economy is likely to grow at 6.6% in the current financial year, the lowest pace during Modi government's rule, suggests the data released by the Central Statistics Office (CSO). The economy was earlier estimated to grow at 6.5%.
"Clearly, there is a pick-up in growth momentum, led by manufacturing and construction on the output side and investment demand on the demand side. Investment activity picking up is a positive sign for the economy," said D K Srivastava, chief policy advisor at EY.
The gross value added (GVA) growth stood at 6.7% in the third quarter of 2017-18 as compared to 6.1% in the previous quarter. GVA was 7% in the year-ago period.
The GVA for manufacturing grew at 8.1%, higher than 6.9% in the previous quarter. Similarly, the agriculture grew at 4.1% compared to 2.7% in the last quarter. The construction sector showed a growth of 6.8%, up from 2.8% in the previous quarter.
Meanwhile, the country's fiscal deficit stood at Rs 6.7 lakh crore for April-January during this fiscal. This is 113.7% of the target set by the government for 2017-18. The net tax receipts for the first ten months of the current fiscal year were Rs 9.7 lakh crore, as per the government data.
Finance minister Arun Jaitley in his Budget speech pegged the fiscal deficit target for the current fiscal at 3.5% of the GDP, up from 3.2% earlier.
In another set of data released by the government, the core sector grew at 6.7% in January against 3.4% in the same month last year.
The eight infrastructure sectors grew at 4.2% in December and 7.4% in November. The petroleum and cement output zoomed, while steel, power and coal production improved in the month of January.
The core sector data has implications for the Index of Industrial Production (IIP) as these sectors account for about 41% of the total factory output. The eight core sectors comprise coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity.
ZIPPING FAST
- The growth was boosted by higher spending and rise in manufacturing, services
- This shows the economy has recovered from impact of the note ban, GST rollout
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As per the latest estimates, the economy is likely to grow at 6.6% in the current financial year, the lowest pace during Modi government's rule, suggests the data released by the Central Statistics Office (CSO). The economy was earlier estimated to grow at 6.5%.
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