Growth in economy hits near 2-year high

New Delhi: Powered by manufacturing and farm sectors, India, which saw its economic growth accelerate to its fastest pace in over two years, bagged the tag of world’s fastest growing economy after clocking 8.2 per cent jump in April-June quarter of 2018-19, according to the official data on Friday.

As for Prime Minister Narendra Modi, who has  come under the criticism of mismanagement of the economy from opposition, will breathe a sigh of relief ahead of the 2019 Lok Sabha elections.

“Reforms and fiscal prudence are serving us well. India is witnessing an expansion of the neo-middle class,” said Union finance minister Arun Jaitley. He said that 8.2 per cent growth in “otherwise an environment of global turmoil represents the potential of New India.”

A low base also helped in the strong growth as India’s GDP in first quarter of last year had languished at 5.6 per cent.

The agriculture, manufacturing and construction sectors, major job creators in India witnessed good growth.

Agriculture sector during April-June quarter of FY19 witnessed a growth of 5.3 per cent after 4.5 per cent growth in January-March period.

Manufacturing sector also grew by 13.5 per cent in Q1 of FY19, as against negative growth of 1.8 per cent in Q1 of FY18. Construction sector grew by 8.7 per cent in Q1 of FY19, as compared to 1.8 per cent in Q1 of FY18.

“The GDP growth rate of 8.2 per cent for the Q1  of fiscal year 2018-19 indicates clearly that several structural reforms introduced such as GST have started giving rich dividends. The growth in manufacturing sector (13.5 per cent) also indicates broad based recovery of demand. It has been a remarkable speed of economic recovery in the last four quarters — 6.3 per cent, 7 per cent, 7.7 per cent and now 8.2 per cent,” said Dr Hasmukh Adhia, finance secretary.

Finance ministry said that the growth is broad-based and has been driven by 8.4 per cent growth in consumption expenditure and 10 per cent growth in fixed investment. “The latter development is particularly encouraging as it has come about over an impressive growth of 14.4 per cent in fourth quarter  of 2017-18 and augurs well for future growth,” it said.

Crisil Research’s chief economist Dharmakirti Joshi said that a low base aided the growth and also household spending.

“For fiscal 2019, we expect 7.5 per cent growth supported by the third straight year of normal monsoons, reductions in GST-related problems, fading of demonetisation impact, budgetary support to the rural economy, and a low-base effect,” said Mr Joshi.

Meanwhile, the government’s finances have shown improvement in July with fiscal deficit at 86.5 per cent of the Budget Estimate, mainly on account of higher revenue collection, as per an official data.

The deficit was at 92.4 per cent of BE at July-end of FY17.