GDP Growth Rises To 7.2%, India Outpaces China To Be Fastest Growing Economy

[Mirza Jatt]

Bouncing back for sure. Still not enough. Should have touched 8 by now. Expecting 10% in 2020s

I doubt 10% by 2020.

BTW good to see you after long time.

 

[ThinkLogically]

Ah! Now I get why chinese are so sure of fudging economic growth, it's because they are doing it every year.

Unlike chinese growth stats ours is vetted by multiple international agencies.

 

[Flynn Swagmire]

@The Eagle

LOL, undian cry babiez. I didn't started this bad name calling. An undian like you started this! Now tag more mods and cry...

 

[Tang_BJ]

Had there been no Demonetization in 2016.. we would have surpassed 8+ mark by now.... Stupid BJP policy

10 questions answered by Q3 GDP data
There’s a favourable base effect, because demonetisation lowered growth in the December 2016 quarter, but even so, India’s GDP growth has improved
Last Published: Thu, Mar 01 2018. 08 00 AM IST
Manas Chakravarty

The widening trade deficit is perhaps the single biggest concern for the Indian economy at the moment. Photo: Bloomberg
These are the questions:

1) Is the economy recovering from the slowdown?

The numbers certainly show a pickup. Growth in gross value added (GVA) at constant prices is up 6.7% for the December 2017 quarter, well above the 6.2% growth in the three months ended September. Sure, there’s a favourable base effect, because demonetisation lowered growth in the December 2016 quarter, but even so, growth has improved.

That said, the economy is yet to achieve the growth rates it had before the twin blows of demonetisation and the introduction of the goods and services tax (GST). Real GVA growth in the three months ended September 2016, the quarter before demonetization, was 7.2%. But we’re getting there, slowly.

What’s more, private sector growth in real GVA, that is leaving out the government contribution via “public administration, defence and other services”, was at 6.6% year-on-year in the December 2017 quarter, a bit more than the 6.3% in the September quarter. The economy is growing even without government support.

2) Which sectors contributed how much to GVA growth?

The highest contribution came from the “Trade, hotels, transport, communication and services related to broadcasting” sector, which accounted for 24.7% of total year-on-year real GVA growth. Manufacturing contributed 20.7% and “Financial, real estate and professional services” 18.6%. Even the government sector contributed 14.1%, which is why, at the end of December 2017 the Union government’s fiscal deficit was already 113.6% of the budgeted figure for the full fiscal year. But the data does show that the recovery has been broad-based. Agriculture’s contribution was 12% and construction’s 8%.

3) Has the manufacturing sector recovered from the pain of GST introduction?

It certainly has—real GVA growth in manufacturing in the December quarter was 8.1%, well above the September quarter’s 6.9% and this was despite an unfavourable base effect. Of course, the strong growth was expected, as Centre for Monitoring Indian Economy data on corporate results shows year-on-year growth in net profits after exceptional items was 15.6% in the December quarter, compared to 2.35% in the September quarter. After a long time, we’re seeing a recovery in the manufacturing sector.

4) Has the slowdown in private services growth been overcome?

Yes, private sector services too are showing a pickup. Unfortunately, despite a very favourable base effect, the “Financial, real estate and professional services” sector saw tepid growth, no doubt weighed down by the problems in the real estate sector. The growth rate has slowed in the “Trade, hotels, transport, communication and services related to broadcasting”. The construction sector, however, has seen a smart pickup in growth.

5) What implications does the GDP data have about job growth?

The rise in growth in the construction sector to 6.8% is very good news, as it is one of the main sources of jobs for the masses. Similarly, the better-than-expected growth of 4.1% for agriculture is also good news, especially in view of widespread reports of rural distress. The only worry is that, as Madan Sabnavis, chief economist at CARE Ratings Ltd, says, “The present revelation of high fiscal deficit up to January could be a risk factor in terms of continued support for construction.”

6) Has investment growth gained momentum?

Real growth in gross fixed capital formation has been an astonishing 12% year-on-year, up from 6.9% in the September quarter. This column had said that a rise in corporate new orders had pointed to increased brownfield investment.

The rise in investment demand, if it holds, is very good news, as investment in fixed assets is essential for a sustainable recovery.

7) How has private consumption growth fared?

Real growth in private final consumption expenditure has slowed to 5.5% in the December quarter, from 6.6% in the September quarter. That this has happened despite the pickup in the farm sector and in manufacturing is a concern.

8) Has the external sector been a drag on growth?

The trade deficit jumped in the December 2017 quarter. Export growth was 2.5%, while imports were up 8.7%, in real terms. The widening trade deficit is perhaps the single biggest concern for the Indian economy at the moment.

It isn’t clear, for instance, why exports haven’t grown much despite the rebound in global trade. On the other hand, as IndusInd Bank Ltd chief economist Gaurav Kapur points out, clearly domestic consumption is leaking into imports. Perhaps that is why the government raised import duties on a variety of items in the latest budget.

9) What do the GDP numbers mean for the markets?

In the currency markets, the widening trade deficit is adding to pressures for a lower rupee. This will likely be reinforced by lower portfolio flows into India, as well as a tightening of monetary policy in the US.

The bond markets will see the confirmation of the recovery as buttressing the case for firmer interest rates. However, this is more or less baked into bond yields, which have already gone up sharply.

The better-than-expected GDP print will be welcomed by the stock markets, although they are at the moment bogged down by the fallout of the Punjab National Bank fraud.

10) What implications does this have for monetary policy?

The news of the ongoing recovery and especially the improvement in investment demand will be welcomed by the monetary policy committee, which had been worried about growth. The Reserve Bank of India had projected GVA growth at 6.6% for 2017-18, which is not very different from the Central Statistics Office’s estimate of 6.4%. The central bank can therefore lay its growth concerns to rest and focus instead on inflation.

First Published: Thu, Mar 01 2018. 07 54 AM IST



@The Eagle

only percentage can be found in this article,interesting,where is raw source data year by year?
I can calculate and verify it .

 

[ashok321]

Oh this China-India-China conundrum:

Beijing says Maldives marine observatory is non-military
(Asia Times) Beijing has denied Indian media reports alleging that a marine observatory backed by Chinese capital and technologies in Maldives had a covert military agenda, jeering that such hysteria stemmed from “jealousy of Chinese friendship with South Asian countries.”

 

[IndoCarib]

I doubt 10% by 2020.

BTW good to see you after long time.

Good to see you too.
I meant 10% is feasible in the 2020s. May be early 2020s. That is the hope and the projection if Modi remains in power until then

 

[Jlaw]

"Manned space flight by 2015"
"Super-supercomputer by 2017"
"Manned Moon Landing by 2020"

"Fastest growing economy"
"Biggest economy in 2050"
"Mumbai will surpass Shanghai in 2015"

 

[Nilgiri]

anything to pacify gullible crowd.

IMF are that gullible? Do you know what an SDDS category country is and why its literally impossible to fabricate/distort underlying data?

If anyone is actually intelligent/informed enough, they would know the one striking dissonant thing in the new GVA series that is recurring (compared to before)....but they would also understand why it is like that.

Hasn't been brought up once in this thread.....just the usual trolling.

Bouncing back for sure. Still not enough. Should have touched 8 by now. Expecting 10% in 2020s

Big NPA mess is bigger than expected (and the cascade it has on credit and GCF). UPA did sooooo badly (and then went on fiscal deficit splurge by way of subsidies), its crazy.

Modi could have gone more front, left and centre on the issue though as soon as he got the PM role. Good news is the GFCF is now looking to be on the mend and getting to 30%+ level again.

The actual amount of growth as a number is not that important. It's actually where that growth is taking place (esp in context of jobs + wealth creation) and the frequency and reliability of the markers. The IIP for example still has much reform to be made....as does the labor data.

You can have nearly 30% nominal USD growth in GDP like there was one year under UPA, but have very little change on the ground (because how much gets laundered through exchange rate, asset inflation and hot undeployed, volatile liquidity)....and worse not even measure the change on the ground parameters that well in first place (UPA had 10 years and didnt move an inch on it).

In fact that kind of bad mismanagement is part of reason for the lower growth now and the structural reforms becoming absolutely necessary ....that thankfully were undertaken (thus leading to adjustment time affecting the growth short term again). 2018 FY will have more useful info and trends to look for. Economy should finally hit a sweet spot again like it did in early to mid 2000s....but this time with much higher base and more genuine structural transformation.

 

[Genesis]

IMF are that gullible? Do you know what an SDDS category country is and why its literally impossible to fabricate/distort underlying data?

If anyone is actually intelligent/informed enough, they would know the one striking dissonant thing in the new GVA series that is recurring (compared to before)....but they would also understand why it is like that.

Hasn't been brought up once in this thread.....just the usual trolling.



Big NPA mess is bigger than expected (and the cascade it has on credit and GCF). UPA did sooooo badly (and then went on fiscal deficit splurge by way of subsidies), its crazy.

Modi could have gone more front, left and centre on the issue though as soon as he got the PM role. Good news is the GFCF is now looking to be on the mend and getting to 30%+ level again.

The actual amount of growth as a number is not that important. It's actually where that growth is taking place (esp in context of jobs + wealth creation) and the frequency and reliability of the markers. The IIP for example still has much reform to be made....as does the labor data.

You can have nearly 30% nominal USD growth in GDP like there was one year under UPA, but have very little change on the ground (because how much gets laundered through exchange rate, asset inflation and hot undeployed, volatile liquidity)....and worse not even measure the change on the ground parameters that well in first place (UPA had 10 years and didnt move an inch on it).

In fact that kind of bad mismanagement is part of reason for the lower growth now and the structural reforms becoming absolutely necessary ....that thankfully were undertaken (thus leading to adjustment time affecting the growth short term again). 2018 FY will have more useful info and trends to look for. Economy should finally hit a sweet spot again like it did in early to mid 2000s....but this time with much higher base and more genuine structural transformation.

I would say it is a little tougher for India to find that sweet spot again. China's rise has alarmed the world. By that I mean, previous rising powers, such as Japan and Germany, to some extent America(very different world for America), they didn't necessarily altered the entire world economic landscape.

People have taken notice now, I'm not necessarily saying a protectionist policy will be the corner stone of Western policy, but it is almost inevitable some form of protectionism will take place.

Also China's policies were draconian to the extreme that forced companies to part with both stock and tech. So, unless India also implement that, it's not going to go as smoothly.

 

[Jackdaws]

Don't insult the Indians, they are like " been there done that."

They had a space ship back in the days when our ancestors were foraging and going to war over freaking black berries !!!

Looks like someone didn't manage to get an Aadhar card.

 

[Nilgiri]

I would say it is a little tougher for India to find that sweet spot again. China's rise has alarmed the world. By that I mean, previous rising powers, such as Japan and Germany, to some extent America(very different world for America), they didn't necessarily altered the entire world economic landscape.

People have taken notice now, I'm not necessarily saying a protectionist policy will be the corner stone of Western policy, but it is almost inevitable some form of protectionism will take place.

Also China's policies were draconian to the extreme that forced companies to part with both stock and tech. So, unless India also implement that, it's not going to go as smoothly.

Exports is one thing and crucial, but I'm talking just even from a fully domestic economic reform standpoint excluding that...the big mess under the previous administration had little to do with export sector (be it goods or services)...but rather a big bungling up of FPI, FDI and credit standards/policies and little concept of resolution process (combined with terrible spending pattern in the budget)....that then put a dampener on everything else that was going on/just starting in the "real" growth parts of economy (labour intensive, M1 - generating, processed exports, imports + assembly etc)....and their associated investment inertia inherited.

That all needs to be sorted out fully, its just commenced....so what we can claw out in the increasing protectionist environment in the foreign markets is just bonus on top....because over deploying strategy there (to grow there with more nominal USD in the system + exposure etc) will lead to same problem all over again (over reliance on foreign liquidity for a system that is not resilient enough to it given its a democracy).

 

[Sanchez]

As they were joking about the condoms exported from China to South Africa size really matters！

 

[fallstuff]

Looks like someone didn't manage to get an Aadhar card.

Awesome !!

Tell your 64 year old virgin PM to send whatever the **** you are harping about using one of those vedic spaceships. I don't wanna miss out on the Gao Cola !!!

 

[Tauren Paladin]

Ah! Now I get why chinese are so sure of fudging economic growth, it's because they are doing it every year.

Unlike chinese growth stats ours is vetted by multiple international agencies.

China's GDP is validated by the IMF and World Bank.

I don't believe any of these articles regarding any country until I see the actual results.

 

[Nilgiri]

China's GDP is validated by the IMF and World Bank.

I don't believe any of these articles regarding any country until I see the actual results.

China and India are both in the same category:

http://dsbb.imf.org/pages/sdds/countrylist.aspx