Chidambaram expresses scepticism over GDP growth prospects in coming year

Chidambaram expresses scepticism over GDP growth prospects in coming year

The latest figures, which mark India's highest growth rate in eight quarters, shot up from 5.6 percent for the same period past year and reinforces the nation's status as one of the world's fastest growing economies.

Union Finance Secretary Hasmukh Adhia said: "The GDP growth rate of 8.2 per cent for the first quarter of 2018-19 indicates several structural reforms such as the GST have started giving rich dividends".

Buoyed by a strong performance in the manufacturing and farm sectors, the Indian economy grew at 15-quarter high of 8.2 per cent in the April-June quarter of current fiscal, according to the government data released on Friday.

Moody's Investor Service recently said the government was likely to miss its fiscal deficit target in 2018-19 due to higher than budgeted oil prices and rising interest rate scenario.

Manufacturing GVA grew by 13.5 percent versus a negative 1.8 percent in the same period of last fiscal.

A CNBC-TV18 poll predicted GDP growth at 7.7 percent.

Sector-wise growth figures for GVA show that manufacturing and construction have registered the biggest improvements.

Last year, India's GDP growth was at 5.6 per cent in the same quarter.

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This compares to the world's expected average growth of 3.9 percent.

Agriculture and allied activities also registered an impressive 5.3 per cent growth rate in Q1FY19, up from 4.5 per cent in Q4FY18, on the back of a surge in production. Manufacturing growth in Q1 2018 had gone into negative territory.

Congress leader and former finance minister P Chidambaram shared a chart showing growth trends in the last two years.

"The services segments - trade, transport, finance, real estate, etc. - have registered lower growth rates compared to past year, where the base effect has worked in the reverse direction", said Madan Sabnavis, chief economist, CARE.

Finance Minister Arun Jaitley, on Thursday, said that India is all set to take over the United Kingdom as the world's fifth largest economy.

From the expenditure side, the composition of GDP remained broadly the same during Q1 2019 and Q1 2018, with private consumption accounting for 55% of the total GDP. While this shows a continuing process of economic recovery, the presence of base effect calls for caution in declaring that India has placed itself in a trajectory of 8% plus growth, he said.

But even more important is the fact that growth has bounced back in the manufacturing and construction sectors, which are considered critical for employment generation. As tailwinds from a favourable base effect weaken from the next quarter onwards, GDP growth is expected to come down slightly, he said.

She added, "But (GDP growth rate) still this suggests that the turnaround is there and that there is an intrinsic resilience in the economy because despite zero macro-economic stimulus and external stresses, we are doing well".

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