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India world’s fastest growing economy

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New Delhi: Its double cheer for Indian government ahead of Holi on Wednesday as the GDP and Eight Core Industries (ECI) data showed signs of economic recovery but fiscal deficit data played the spoilsport at 113.7 per cent of the full year’s target.


Figures from the Central Statistics Office showed GDP grew 7.2 per cent, a significant improvement on the previous quarter as the after-effects of high-profile fiscal initiatives faded.


A 7.2 per cent growth rate also means that India has regained the status of the fastest growing economy as it topped China’s 6.8 per cent pace for October-December. The last time India had a faster growth rate was in the final three months of 2016.


Most economists had predicted that a rebound which began in the last quarter would pick up momentum, but the growth rate — the best in more than a year — exceeded many forecasts. “The worst of Indian economy is behind us,” declared Sujan Hajra, economist at Anand Rathi securities. The steep upswing comes after bouts of sluggish growth blamed on landmark reforms pushed by Prime Minister Narendra Modi.


Growth steadily dipped in 2017 before bottoming out at 5.7 per cent in the three months to the end of June — its lowest rate in three years.


Analysts blamed a sudden ban on high-value banknotes in late 2016 and disruption from a nationwide goods and services tax (GST), which sent shockwaves through India’s $2 trillion economy. The slowdown boded ill for India, which struggles to absorb tens of thousands of new job-seekers into the economy every month.


The government defended the pain from its policies as necessary to raise tax revenues and crack down on corruption. But the dragging effect of these major reforms appeared to recede in the three months to September as the economy bounced back to 6.5 per cent, before climbing steadily again in this latest quarter.


The government promised hundreds of billions of dollars in its annual budget to boost growth and employment in rural areas hit hard by the cash ban.


Analysts said these budget measures would help India’s countryside — where most of its 1.25 billion people live — begin slowly to recover, generating jobs and improving farm incomes. The government estimates the economy will grow by 7.2-7.5 per cent in the second half of the current fiscal year and has said the country is on track to achieve growth of eight percent “soon”.


Also the pace of India’s eight major industries’ output accelerated in January to 6.7 per cent from an increase of 4 per cent in December 2017 and 3.4 per cent in the corresponding month of the previous fiscal, official data revealed. “The combined Index of ECI stands at 133.1 in January, 2018, which was 6.7 per cent higher as compared to the index of January, 2017,” the Ministry of Commerce & Industry said. “Its cumulative growth during April to January, 2017-18 was 4.3 per cent.”


The ECI index represents the output of major sectors like coal, steel, cement and electricity and carries 40.27 per cent weightage of the Index of Industrial Production which is the macro-gauge for India’s factory output.


However, India’s fiscal deficit for April-January period of 2017-18 stood at 113.7 per cent of the full year’s target, official data showed.


The data furnished by the Comptroller General of Accounts showed that during April-January, the fiscal deficit stood at Rs 6.77 lakh crore, which is 113.7 per cent of the full year’s target.


The capital expenditure during the period stood at Rs 2.64 lakh crore. The revenue deficit during the period was at 4.8 lakh crore, revealed the data.


While the Nikkei India Manufacturing Purchasing Managers’ Index (PMI), a composite indicator of manufacturing performance, fell to 52.1 from 52.4 in January 2018, though it remain in positive territory. Everything above 50 shows a positive indication.


Business conditions of India’s manufacturing sector improved in February, but at a slower pace from January.


— Agencies


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