New Delhi: India’s GDP accelerated in January to March 2015 period (fourth quarter of 2014-15) to 7.5 per cent, overtaking China as the fastest growing major economy in the world. This took the overall GDP growth for FY 2014-15 to 7.3 per cent against 6.9 per cent in the 2013-14. Finance minister Arun Jaitley said that the economy is clearly on “a recovery path”. He said an economy growing at fastest pace in the world cannot be ‘fragile’ as alleged by the former Prime Minister Manmohan Singh.
Finance ministry said that those sectors within control of policy manufacturing and services improved substantially while those dependent on factors beyond the policy control such as agriculture (dependent on weather) and exports (on foreign demand), “did less well.”However, the high GDP numbers have come on the back of new methodology which the Central Statistical Organisation (CSO) adopted earlier this year to calculate the GDP.
In January, CSO revised India’s growth to 6.9 per cent in the 2013-14 from the earlier estimate of 4.7 per cent.Before this data revision, it was a dominant view that India had seen worst growth in 2013-14.Some economists said that the latest GDP numbers released on Friday does not reflect the ground reality and people will now have to adjust that 7 per cent plus growth under the new methodology is not the same what it was based on older formula.
While the GDP has grown at a fast pace the corporate earnings are dismal, industrial activity is weak, private investment is yet to start and bank credit uptake is slow. Rating agency, India ratings, principal economist and director (public finance) Sunil Kumar Sinha said that the people need to recognise that methodology to calculate GDP has undergone a change and it is no longer estimated at factor cost but at market cost.
