NEW DELHI: With the government is all set to present the Budget on February 29, the growth estimates of India has exceeded China’s growth. Indian economy is expected to grow at a 5-year high of 7.6 per cent in 2015-16 on improved performance in manufacturing and farm sectors, faster than the 6.9 per cent growth in China.
According the Central Statistics Office (CSO), the gross domestic product (GDP) or economic growth is estimated at 7.3 per cent in October-December quarter of this fiscal.
The government is caught between the urge to boost spending in an economy that’s showing mixed signs of strength, and the need to curb expenditure to meet budget deficit targets.
“The onus is on the government to sustain this pace,” said Prasanna Ananthasubramanian, chief economist at ICICI Securities primary dealership in Mumbai. “The drivers of growth from the data suggests that government spending and consumption spending are really strong.”
The CSO has also revised upwards the GDP growth estimates for April-June and July-September quarters to 7.6 per cent and 7.7 per cent from earlier calculation of 7 per cent and 7.4 per cent, respectively.
At 7.6 per cent, India would be growing at the fastest pace in the last five years. The previous high was recorded at 8.9 per cent in 2010-11.
Commenting on the GDP data, Shaktikanta Das, economic affairs secretary said, “The direction of the numbers is very positive. The policy and reform measure the government has undertaken in last one-and-a-half years are beginning to show results.”
The manufacturing sector is estimated to grow at 9.5 per cent in 2015-16, up from 5.5 per cent a year ago. Similarly, in case of agriculture sector, the growth has been projected at 1.1 per cent as against decline of 0.2 per cent a year ago.
However, there’s been a lot of scepticism about India’s GDP data since the government revised the way it calculates those numbers in January last year. The CSO estimate of 7.6 per cent growth in current fiscal is higher than the projection by RBI, finance ministry and IMF.
While RBI projected a growth rate of 7.4 per cent, finance ministry’s mid-year economic review had estimated the growth to be between 7-7.5 per cent. Besides, IMF had said India will clock 7.3 per cent growth in 2015-16 and Asian Development Bank projected it at 7.4 per cent.
Pronab Sen, chairman National Statistical Commission said, there is re-distribution happening in the Indian economy. While there have been positive surprises in the quarter’s growth numbers, fourth quarter GDP may be back to 7.3 per cent.
Sajjid Chinoy, chief India economist and executive director at JP Morgan says, boost from oil prices this quarter may not be a benefit going forward and there is loss of momentum in growth compared to the first half of FY16.