MUMBAI: For the first time in five quarters, India’s economic heartbeat, aka GDP, accelerated at a faster clip of 7.2 per cent during the third quarter of FY18, regaining the ‘world’s fastest-growing economy’ tag.
Rising GDP will paper over the cracks caused by demonetisation and GST, but don’t uncork the bubbly yet. Experts warn the feel-good factor could be brief and is squarely dependent on monsoon, oil prices, pick in private investments and spending.
That’s why, the Central Statistics Office (CSO), keepers of economic data, exercised caution pegging real GDP growth at 6.6 per cent in FY18, shades lower than 7.1 per cent seen in FY17. Officials faced flak when first quarter GDP printed way out of line at 5.7 per cent and seen in this backdrop, the logic behind the modest estimates becomes clear: It’s better to be approximately right than precisely wrong.
Also, the fairytale 7.2 per cent growth pleases select watchers of the economic drama (read policy wonks), not the ordinary, whose lives may not change much, thanks to per capita income that’s likely to grow at 5.2 per cent in FY18, lower than 5.8 per cent the previous year.
For now, amid the lingering possibility of rate hikes and sticky inflation, economic recovery may temporarily soothe RBI’s nerves, so expect a pause in repo rate.
GVA for manufacturing grew at 8.9 per cent, higher than the previous quarter’s 6.9 per cent, while farm sector grew 4.1 per cent as against 2.7 per cent. For optimists, there’s only way — upwards.
Though the third quarter saw a collective rebound in agriculture, manufacturing, construction and services, they aren’t completely out of danger, with each sector battling its own set of challenges.
Gross fixed capital formation grew at a multi-quarter high of 12 per cent over last year, government spending rose 6.05 per cent as against 2.9 per cent in the previous quarter, while private consumption rose 5.6 per cent, lower than the second quarter’s 6.5 per cent.