Chidambaram expresses scepticism over GDP growth prospects in coming year

Chidambaram expresses scepticism over GDP growth prospects in coming year

Gross domestic product expanded by 8.2% in the three months to June, compared with a 5.5% rise in the same quarter a year ago, reinforcing India as one of the fastest growing economies.

A Reuters poll, HDFC Bank's research and a CARE Ratings report are expected 7.6 percent GDP growth for the first quarter of current fiscal.

In the fourth quarter of 2017-18, GDP growth was at 7.7%.

The economic activities which registered year-on-year growth of more than 7 per cent during the June quarter are manufacturing, electricity, gas, water supply and other utility services, construction, and public administration, defence and other services, according to data by Ministry of Statistics and Programme Implementation.

The gross domestic product (GDP) at constant (2011-12) prices in the first quarter of 2018-19 is estimated at Rs 33.74 lakh crore, as against Rs 31.18 lakh crore in Q1 of 2017-18, showing a growth rate of 8.2 per cent, a Central Statistics Office statement said.

Private sector lender HDFC Bank, in its research report, said that there are some genuine signs of revival in the economy as the major growth is likely to come from the manufacturing and the service sector.

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The agriculture sector grew at 5.3% compared to 3% last year, while construction also saw a healthy bump (8.7% compared to 1.8% last year).

Finance Minister Arun Jaitley tweeted, "More India's GDP for the first quarter this year growing at 8.2 per cent in otherwise an environment of global turmoil represents the potential of New India". The government also revised the core sector growth figure for June to 7.6% and for May to 4.3%. "Oil prices at current levels will raise expenditures and add to existing pressures on the fiscal position stemming from the lowering of goods and services tax (GST) rates on a range of consumer goods and a tax cut for small businesses as well as the relatively high minimum support prices (MSPs) set for this year", Moody's said.

"We expect RBI to hike rates in March-quarter next year with no changes this year", he said. Manufacturing growth in Q1 2018 had gone into negative territory.

"Some concerns linger on the sustainability of growth of around 8 per cent in the remaining quarters of FY2019, given the base effect, risks posed by higher crude oil prices, interest costs and a weakening rupee, as well as fiscal constraints", said Aditi Nayar, principal economist at ICRA.

"This is probably the best GDP trend we have seen in the first half helped by a favourable base".

Quarterly growth fell as low as 5.6 percent in mid-2017 as the economy reeled from a shock cash ban that scrapped 86 percent of currency notes.

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