GDP at 7.4 per cent, India growing the fastest

Manufacturing leads the way

India’s GDP accelerated in the July-September 2015-16 period (second quarter) to 7.4 per cent, overtaking China as the fastest-growing major economy in the world.

The Indian economy had grown by seven per cent in April-June (first quarter) of 2015-16. This takes the overall growth in the first six months of 2015-16 to 7.2 per cent.

The growth in the second quarter was due to green shoots in the manufacturing sector which came at 9.3 per cent against 7.2 per cent in the first quarter. The farm sector, too, grew at 2.2 per cent in the second quarter against 1.9 per cent in the first quarter despite a deficient monsoon. However, the services sector growth slowed marginally to 8.8 per cent in the second quarter from 8.9 per cent in the first quarter.

China had reported an annual growth of 6.9 per cent in the second quarter of 2015-16. “I think the second quarter figures give us a sense of satisfaction... We expect growth this year to be better than last year and even better the next year,” said Union finance minister Arun Jaitley.

The minister added that the manufacturing sector recorded “significant” growth in the September quarter despite an adverse global situation and hoped that private sector investment would pick up faster in the coming quarters. “And when manufacturing starts turning despite globally adverse circumstances, I think that’s a very significant figure from our point of view,” he said.

Mr Jaitley said the country has been facing a large number of domestic and global challenges, and slowly private investment has started to pick up. “A slowdown of the global economy, at least visibly, impacts our exports, so that is one challenge we have. There is also private sector investment, which has now started picking up... And I do hope that in months to come it picks up faster,” he said.

Economic affairs secretary Shaktikanta Das tweeted that the second quarter GDP growth at 7.4 per cent strengthens the positive outlook for the current year.

“7.5 per cent for the year looks achievable,” he added.

GDP had grown by 7.5 per cent in the January-March 2015 period (fourth quarter, 2014-15). “Looking ahead, we believe that low inflation and easy monetary conditions will remain supportive of growth in the rest of FY16. Additionally, the lagged impact of interest rate reductions will also be felt in the coming quarters,” said rating agency Crisil.