Indian economy on recovery, completes growth of 8.2 percent in first quarter

With 8.2 percent growth in the first quarter, the Indian economy has completed its recovery process and will exceed 7.5 percent growth rate in fiscal 2018-19, Economic Affairs Secretary Subhash Chandra Garg said on Friday.

He also said the country will meet its fiscal deficit target of 3.3 percent and expressed his belief that both oil price hike and rupee depreciation are temporary.

"With this quarter, I think the V-shaped recovery process is complete," Garg told reporters.

As per an official data released by the Central Statistics Office (CSO), the GDP at 2011-12 prices in the first quarter of 2018-19 registered a growth of 8.2 percent, up from 7.7 percent in Q4 of 2017-18 and 5.6 percent from the year-ago corresponding quarter.

"We predicted growth would be in the range of 7 to 7.5 percent annually. I think we are reasonably confident now that we might even exceed the higher end of our projection and therefore Indian economy would be performing robustly and will definitely be the highest growing economy in the world," the Finance Ministry official said.

Sharing highlights of the GDP data, he said 13.5 percent growth in the manufacturing sector through on a low base of last year signals a very good turnaround.

"Another notable point is the robust capital formation. This quarter we grew by 10 percent building on the last quarter growth of 14.4 percent. This has started getting reflected in the ratio of the investment in the economy.

"We had 31 percent investment rate last year, it is now 31.6 percent thanks to the gross capital formation coming up very well," he said.

On the possibility of touching double-digit growth rate, he said 10 percent growth might happen in a quarter but 10 percent for an annual growth is very ambitious and may not happen. In nominal terms, the growth in the quarter was 12.5 percent, he said.

Further, he said 8.2 percent growth in the first quarter over 5.6 percent growth in the corresponding quarter last fiscal cannot be simply explained by the base effect.

On fiscal deficit for April-July, which stood at Rs 5.40 lakh crore accounting for 86.5 percent of the full year's target, Garg said the government deliberately follows a pattern of more expenditure and less revenue in the first quarter and more revenue and relatively less expenditure in the last quarter.

"So, the fiscal deficit of 86 percent in first four months does not indicate any severe fiscal stress. We are exactly on our plans as far as fiscal management is concerned. We are perfectly confident that the fiscal deficit target of 3.3 percent will not be exceeded at all."

On rising crude oil prices and rupee depreciation, the Secretary said he hoped that both the factors are temporary and there will be little impact on inflation.

"The inflation number so far suggests a very moderate, well-controlled inflation. We had 4.17 percent inflation last month. Inflation in aggregate is in a very comfortable zone. However, I do recognize that oil price increase and rupee depreciation will have inflationary implications. I hope both these factors are temporary," he said.

Garg also said the capital account performance of the economy was doing well with 13-14 percent hike in FDI in the first quarter and signs of a reversal in FPIs.

"Therefore even in the capital account, we should have a steady performance going and that is what gives me confidence that with our reserves and the capital flows emerging, the temporary volatility you see in the rupee should be gone," he added.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)