Will India grow at 5-year high of 7.6% in 2015-16?

Indian economy will grow at a 5-year high of 7.6% in the fiscal ending March, overtaking a slowing China, on the back of improvement in manufacturing and farm sectors. Gross domestic product (GDP) will expand by 7.6% in 2015-16 compared with 7.2% a year earlier, according to the Central Statistics Office (CSO). The previous high at 8.9% was recorded in 2010-11.

China grew 6.9% in 2015 while Russia contracted 3.7%. Brazil is forecast to shrink 3.7%. However, India's GDP growth slowed to 7.3% in October-December, from the revised 7.7% of the previous quarter. It, however bettered the 6.6% in the same period of the last fiscal.

On the GDP data, Economic Affairs Secretary Shaktikanta Das said: "The direction of the numbers is very positive. The policy and reform measure the government has undertaken in last one and a half years are beginning to show results." The economic growth projection of 7.6% for the current fiscal by CSO has surpassed the estimates of the Finance Ministry, Reserve Bank and other multilateral agencies.

The CSO's estimate is higher than the Finance Ministry's mid-year economic analysis, which projected a growth rate of 7-7.5% for the current fiscal. It is also higher than 7.4% estimated by the Reserve Bank of India.

IMF has projected India's growth at 7.3% while Asian Development Bank expected India's GDP to expand at 7.4% in 2015-16. Moody's Investors Service has put the corresponding figure at 7% for this fiscal.

"Going ahead, we hope to see a continued momentum on the reforms front. We look forward to the Union Budget giving a positive direction to the economy. The focus should clearly be on introducing measures to further boost domestic investments and demand," Ficci Secretary General A Didar Singh said. 

The real Gross Value Added (GVA), a new concept introduced by CSO to measure economic growth, is projected at 7.3% in this fiscal against 7.1% in 2014-15. The manufacturing sector is estimated to grow at 9.5% in 2015-16, up from 5.5% a year ago.

Similarly, in case of agriculture sector, the growth has been projected at 1.1% as against a decline of 0.2% in year-ago period. The growth of mining and quarrying sector, electricity and power supply and other services is likely to witness deceleration during the current financial year.

Referring to the deceleration in GDP growth in the third quarter, Assocham President Sunil Kanoria said, "Government should also take proactive policy measures in the upcoming Budget, specifically focused on agriculture, infrastructure sector, steel, banking and financial sectors, among others, to revive the economy."

According to the data, the GVA grew at 7.1% in third quarter of this fiscal compared to 6.7% in the same period a year ago. The GVA for the farm sector contracted one% in October-December quarter compared to decline of 2.4% in the same period a year ago.

However, the GVA for manufacturing sector grew at 12.6% in the third quarter as against a growth of 1.7% in the same three month period a year ago. Similarly, the GVA for mining and quarrying sector grew at 6.5% in the quarter under review compared to 9.1% growth in same period a year ago.

The GVA growth for electricity, gas, water supply and other utility services too slowed down to 6% from 8.8% in same quarter a year ago. The GVA for construction grew at 4% in the quarter compared to 4.9% in same period in 2014-15. 

However, the GVA for trade, hotels, transport, communication and services related to broadcasting grew at 10.1% in third quarter compared to 6.2% in the same period a year ago.