Wednesday, June 1st, 2016

Indian economy expands by 7.5 percent in 2015-16, fastest in five years

Narada Desk | June 1, 2016 6:00 am Print
In the last quarter of the fiscal year under review, in fact, the expansion in India's gross domestic product (GDP) at constant prices -- which factors for inflation -- was 7.9 per cent, and distinctly higher than most predictions

The Indian economy expanded by 7.6 per cent in 2015-16 to log the fastest growth among larger countries, while also outpacing China, official data showed on Tuesday. While this was also the fastest growth for India in five years, India Inc said it was an indication of recovery gaining momentum.

In the last quarter of the fiscal year under review, in fact, the expansion in India’s gross domestic product (GDP) at constant prices — which factors for inflation — was 7.9 per cent, and distinctly higher than most predictions.

The real per capita income also rose 6.2 per cent to Rs 77,435.

As per data on national income released by the Central Statistics Office, the country’s GDP in actual numbers and in real terms was Rs 113.50 lakh crore in 2015-16, against Rs 105.52 lakh crore in the year before, showing a growth of 7.6 per cent.

Based on the Reserve Bank of India’s reference exchange rate of Rs 67.20 to a US dollar as on Tuesday, the country’s gross domestic output was valued at $1.69 trillion.

As per the latest data, the growth for the first four quarters of fiscal 2015-16, starting with the April-June period was 7.5 per cent, 7.6 per cent, 7.2 per cent and 7.9 per cent, respectively.

On an annual basis, India had grown by 7.2 per cent in 2014-15, 6.6 per cent in the year before and 5.6 per cent in 2012-13.

Sectorwise, those which registered growth of over 7 per cent are ‘financial, real estate and professional services’ (10.3 per cent), manufacturing (9.3 per cent), ‘trade, hotels, transport, communication and services related to broadcastingÂ’ (9 per cent), and ‘mining and quarryingÂ’ (7.4 per cent).

Agriculture and allied activities, which had declined one percent in the third quarter, have shown a growth rate of 1.2 per cent, as against the growth rate of 1.1 per cent in the advance estimates, CSO said.

“The upward revision is on account of use of third advance estimates of crop production released by the Ministry of Agriculture,” the statement said.

In the case of China, the growth rate was lower at 6.8 per cent in the last quarter of calendar year 2015 and 6.7 per cent during the first quarter of this year — the slowest for the Asian giant since 2009.

In an assessment earlier this year, both the International Monetary Fund (IMF) and the World Bank had said India’s growth in 2015-16 will outpace that of China, and expand even faster during the current fiscal.

Reviewing major developments during the fiscal, the Economic Survey for 2015-16 had said in February that the country’s GDP growth at constant prices was projected to rise to 7.6 per cent in 2015-16 from 7.2 per cent in 2014-15.

Among the other assessments, IMF had said in May that India remained the fastest-growing large economy with GDP expected to increase by 7.5 per cent in 2015-2016, while the World Bank had projected the growth at 7.3 per cent.

The Reserve Bank of India’s assessment was 7.4 per cent.

Commenting on the GDP data, president of industry chamber Ficci, Harshavardhan Neotia, said the numbers for the last fiscal are in line with the advance estimates put out earlier by the CSO.

“What is even more encouraging is the growth seen in quarter 4 of 2015-16 and which stands at 7.9 per cent. This is a key indicator of recovery gaining momentum,” he said in a statement here.

In this connection, Ficci had said on Monday that a majority of the economists it had surveyed earlier “were of the view that investment cycle will take at least two more quarters to witness a pickup..

Industry body Assocham described the GDP numbers for 2015-16 as “encouraging.”

“Although GDP figures portray an overtly robust picture of Indian economy, however some of the other macro indicators such as bank credit growth, rural demand and factory output do not support such a depiction,” said Assocham President Sunil Kanoria.

Terming GDP figures as being largely in line with expectations, Kotak Mahindra Bank said one reason for the pickup in private consumption could be attributed to the heavy dividend payouts by corporates rather than increasing investment spending.

“Overall, the continued weakness in capital goods production and lack of capacity addition continues to remain a drag on growth,” Upasna Bhardwaj, economist at Kotak Mahindra, said.

“Private capex will likely remain the missing link for a few more quarters with growth continuing to be heavily reliant on government spending,” she added.