At 8.2 per cent, GDP clocks highest growth rate in 3 years

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At 8.2 per cent, GDP clocks highest growth rate in 3 years

Gross domestic product in the country grew 8.2% year-over-year last quarter, according to government data out Friday, up from 7.7% in the first three months of 2018.

The manufacturing sector rose an annual 13.5% compared to a decline of 1.8% in the year ago quarter, while the crucial farm sector rose 5.3%, up from 3% growth in first quarter of 2017-18.

The International Monetary Fund has forecast GDP growth for the current fiscal year at 7.3 percent, rising to 7.5 percent the following year.

Industry chamber Assocham said the best part about an impressive GDP growth "is that it is being led by employment-intensive manufacturing".

GDP growth rate of 8.2 per cent in the June quarter is also the fastest in the past eight quarters.

The high growth for this quarter in India is partly a result of the low base effect. "But, Q1 growth rate is based on the lowest base (5.6) in the last 8 quarters", said Chidambaram.

On Wednesday, India's central bank said economic growth was expected to accelerate to 7.4 percent in the fiscal year ending next March, bettering the 6.7 percent posted last fiscal year, despite risks posed by higher oil prices and global trade tensions.

Dharmakirti Joshi, Chief Economist at Crisil Research, expects 7.5 per cent growth to be supported by the third year of normal monsoon and reductions in GST-related problems. "GVA at Basic Price at current prices in Q1 of 2018-19, is estimated at Rs 41.02 lakh crore, as against Rs 36.34 lakh crore in Q1, 2017-18, showing an increase of 12.9 per cent", said the Ministry's statement.

India is the world's fastest-growing economy and expanding more quickly than China, which reported 6.7% economic growth in the second quarter.

GVA, which is GDP minus taxes, serves as a more realistic proxy to measure changes in the aggregate value of goods and services produced in the economy. IIP manufacturing registered a growth rate of 5.2 percent during the first quarter of 2018-19 as compared to 1.6 per cent during first quarter of 2017-18.

For instance, the manufacturing sector grew at 13.5% in the June quarter compared to -1.8% a year ago.

The officials explained to S&P that debt-to-GDP ratio is a long term consideration and should not be immediate concern for rating upgrade, he said. Contrary to our expectation of a modest sequential slip, GDP growth has strengthened in Q1 FY2019 relative to Q4 FY2018.

Gross Fixed Capital Formation (GFCF), a useful metric to measure corporate investment activity, grew 10.0 percent in April-June.

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