As per reports, India’s quarterly growth rate for the first three months of the current fiscal year has hit 8.2%, the highest in 15 quarters. India has cemented its place as the fastest growing economy with China clocking a 6.7% growth rate in the same quarter. According to reports, GDP at constant (2011-12) prices in Q1 of 2018-19 is estimated at 33.74 lakh crore, as against 31.18 lakh crore in Q1 of 2017-18, showing a growth rate of 8.2%.
Private consumption picked up in the quarter and investment demand showed a spurt as well indicating an increase in the consumption demand and that factories may be increasing their capacity. Livemint reported, “Manufacturing grew in double digits at 13.5% in the June quarter from a contraction of 1.8% in the same quarter a year ago, while construction made strong recovery to grow at 8.7% against 1.8% during same period last year, which is good for the job market, according to data released by the Central Statistics Office (CSO) on Friday. Agriculture also grew at a robust 5.3% in the June quarter against 3% during the same quarter a year ago.”
Additionally, The petrochemicals sector saw a credit offtake growth of 19.14 per cent in the first quarter against a 2.9 per cent growth last year. Textiles saw a credit offtake growth of 5.38 per cent against a 4.22 per cent contraction last year. Also, engineering posted a 4.29 per cent growth in credit against a 4.05 per cent contraction previously.
“With the manufacturing sector growing well, it all comes to the banks now. Banks must ensure that flow of credit must start taking place in a big way. The demand for credit will start picking up now,” Amitabh Kant, CEO, Niti Aayog, told Business Standard. “With capacity utilisation at a peak, a majority in the private sector wants to make a fresh investment to meet the growing demand in the auto and engineering sectors. This is a good sign,” he added.
Shashank Mendiratta, an India economist at ANZ Bank, said: “The numbers are pretty solid and mostly driven by public investment and higher consumption, especially, in the rural-end with this being a pre-election year. “This is probably the best GDP trend we have seen in the first half helped by a favourable base. Going ahead, I expect the growth rate to be moderate as private investment is unlikely to grow at a faster rate due to stressed assets.”
DEA secretary Subhash C Garg opined, “We had over 8% of quarterly growth last time in the first quarter of 2016-17. Now after 8 quarters, we are at 8.2%. From 8.1% we have come to 8.2% which signals economic growth now on a steady high growth path.”
“India’s GDP for the first quarter this year growing at 8.2% in otherwise an environment of global turmoil represents the potential of New India. Reforms and fiscal prudence are serving us well. India is witnessing an expansion of the neo-middle class,” Finance Minister Arun Jaitley tweeted.
BJP President Amit Shah tweeted, “India’s rapidly growing GDP is a reflection on the transformative changes being ushered in by Prime Minister Shri Narendra Modi’s government. Indian economy is witnessing unprecedented growth in every sector, from manufacturing to agriculture.”
Ahead of Lok Sabha elections next year, the GDP growth rate which has exceeded expectations will come as a huge boost to the Narendra Modi government. The numbers are a strong refutation of the claims made by the opposition parties that the economy is in tatters. The numbers also bust the narrative that demonetization and the implementation of GST by the BJP government have doomed the Indian economy. Also, rural growth has overtaken urban India in automobile sales which is another indication that the rural economy is flourishing. With the formalization of the economy strongly afoot, the economy will continue to prosper moving forward.