7.7-pct GDP growth rate shows India's economy on uptrend: business leader
- Author: Darren Santiago Jun 03, 2018,
Jun 03, 2018, 20:37
India's growth expanded to 7.7 percent in the fourth quarter of the financial year, official data showed Thursday, as Asia's third-largest economy continues to recover from the fallout of several disruptive economic initiatives.
India's GDP grew slightly better than expected at 7.7% for the quarter ending March 31, 2018, raising the prospect of an interest rate hike by the country's central bank later this year.
Reacting to the GDP numbers, secretary general of Assocham, DS Rawat, said: "While Indian economy is in cyclical recovery led by both investment and consumption, however, higher oil prices and tighter financial conditions will weigh in on the pace of acceleration".
Consumption, which accounts for almost 70 per cent of the US$2.5 trillion (RM9.95 trillion) economy likely remained firm, supporting economic growth as reflected in the higher sales of consumer durables and vehicles.
Prices of petrol and diesel have surged to record highs in India as the global crude oil prices hit $80 per barrel, pressuring the rupee and dubbing it Asia's worst performing currency.
Manufacturing sector GVA (gross value addition) grew at 9.1 per cent in fourth quarter, up from 6.1 per cent year ago. We expect the economic growth to consolidate above 7% in FY2019, on the back of the continued benefits of the implementation of the GST, healthy consumption demand, government expenditure, and a back-ended pickup in investment activity.
Forecasts for January-March ranged from 6.9 to 7.7 per cent.
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"We expect FY19 credit growth to improve marginally to 12-13 percent with private sector banks leading the improvement, with public sector banks being constrained by capital requirements and resolution of stressed corporate loans". There have been various quarters and years when oil prices have gone up but there has been growth also.
For oil-importing India, the combination of a weaker currency and surging oil prices is a threat not only for the current-account deficit, but also inflation.
With growth proving robust and prices on the rise, the Reserve Bank of India may change its policy stance next week.
Higher crude oil prices have already hurt the rupee, which slumped to near a record low this month. Alongside, rising global trade tensions due to the imposition of import tariffs by the United States could moderate global trade growth, tempering Indian exports, analysts said.
Industry chamber Assocham said the GDP estimates in March quarter are in line with the expectations and indicates significant growth recovery.
Monsoons deliver about 70 percent of India's annual rainfall and are the lifeblood of its $2.5 trillion economy, spurring farm output and boosting rural spending.