India's GDP grows 7.7 pc in Q4, retains fastest growing economy tag

Moody's cuts India's 2018 growth forecast to 7.3% from 7.5

Robust performance by manufacturing, construction and service sectors and good farm output pushed the India's January-March 2018 GDP growth to a seven-quarter high of 7.7 per cent, helping it retain the fastest growing major economy tag. However, we expect tighter financing conditions, rising oil prices and slower investments in the run-up to elections to slow GDP growth later in the year.

Interim Finance Minister Piyush Goyal has said that, GDP growth has been increasing continuously every quarter with growth of 7.7 percent in the fourth quarter of 2017-18. Rapid growth in agriculture (4.5%), manufacturing (9.1%) and construction sectors (11.5%) contributed to the overall growth. Demand seemed to have picked up on the back of a concerted increase in government spending, from 10.3 per cent of GDP in 2016-17 to 10.8 per cent previous year at constant prices, perhaps largely on account of pay panel obligations.

According to World bank the Indian economy expected to grow at 7.3 per cent in 2018-19 on the back of rising private consumption and investment.

The gross value addition (GVA) for the January-March quarter expanded at 7.6 per cent from from 6 per cent a year ago, data showed.

The growth rate for 2017-18 was higher than the government's first and second advance estimates - at 6.5% and 6.6% - and in sync with what the International Monetary Fund, the World Bank and the Economic Survey had estimated.

The rate is higher against 5.6 percent, 6.3 percent and 7.0 percent respectively, in the first three quarters, Q1, Q2 and Q3 of 2017-18. Goldman Sachs Group Inc. cut its growth projection for the year ending March 2019 to 7.6 percent from 8 percent, amid concerns that the banking system's woes are more widespread.

Growth in Asia's third-largest economy, reported by the ministry, trumped forecasts in a Reuters poll of annual growth at 7.3 percent. The GVA growth was 7.1 per cent in 2016-17.

The gross national income at current prices is estimated at Rs 165.87 lakh crore during 2017-18, as compared to Rs 150.77 lakh crore during 2016-17, showing a rise of 10 percent.

In terms of GDP, the rates of GFCF at current and constant (2011-12) prices during 2017-18 are estimated at 28.5 per cent and 31.4 per cent, respectively, as against the corresponding rates of 28.5 per cent and 31.1 per cent, respectively, in 2016-17.

We hope that the government will continue investing in infrastructure to accelerate the pace of growth even further, he added.

Replying to a query, the Secretary said, oil pricing policy needs to be looked at if prices are elevated.

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