Indian economy is on right track: Union Finance Minister Piyush Goyal

Indian economy is on right track: Union Finance Minister Piyush Goyal

Indian economy is on right track: Union Finance Minister Piyush Goyal

Growth for Asia's third-largest economy, reported by the Ministry of Statistics, trumped forecasts in a Reuters poll for annual growth of 7.3 per cent. GDP had grown at a revised 7 per cent in October-December quarter. The country registered an economic growth of 6.4 per cent in 2017 and 5.9 per cent in 2016. Manufacturing and agriculture sector also recorded growth.

"We have been saying that the fourth quarter will be good which is reflected in the 7.7 per cent".

Consumer-price growth is already picking up-reaching 4.6 percent in April-and for a central bank that aims to keep inflation around the 4 percent midpoint of its target band, an interest-rate hike can't be far away. The moderation in growth was driven by impacts from successive policy shocks of demonetization and the Goods and Services Tax; and the twin balance sheet problem of high corporate leverage and banks' stressed balance sheets.

The rate is higher against 5.6 percent, 6.3 percent and 7.0 percent respectively, in the first three quarters, Q1, Q2 and Q3 of 2017-18.

Sampath Reddy, CIO, Bajaj Allianz Life said GDP growth Q4 FY18 came in above expectations at 7.7%, on the back of gross fixed capital formation (or investments).

However on yearly basis, the Indian economy grew at a four-year low of 6.7 per cent in 2017-18, down from 7.1 per cent in the previous fiscal. Moody's has, for instance, predicted a growth rate of 7.3 per cent in 2018-19, less than that of the Centre, on account of fuel inflation.

Electricity, gas, water supply and other utility services GVA grew at 7.7 per cent in the fourth quarter as compared to 8.1 per cent a year earlier. There has been improvement in growth rate in manufacturing and construction. However, for the fiscal year that ended March 31, India's growth rate works out to 6.7 per cent, down from 7.1 per cent in 2016-17.

The almost $1.7 trillion formal banking sector, which is coping with non-performing assets (NPAs) and emergence of fraud scandals, is worry point in the economy.

"GVA growth also escalated to 7.6% y-o-y from 6.6% in Q4, primarily driven by agriculture and industry. This shows the economy is on the right track and is set for even higher growth in the future", Piyush Goyal, Minister of Finance, Government of India said.

Reacting to the GDP numbers, secretary general of Assocham, DS Rawat, said: "While Indian economy is in cyclical recovery led by both investment and consumption, however, higher oil prices and tighter financial conditions will weigh in on the pace of acceleration".

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