Mumbai: India regained its status of the world's fastest-growing major economy in the October-December quarter, surpassing China's growth after a gap of one year, driven by a pick-up in manufacturing and services sectors.
India, Asia's third largest economy, grew 7.2 per cent in the October-December quarter, its fastest pace in five quarters, according to government data released on Wednesday.
This is the highest quarterly growth recorded since July-September quarter of 2016-17.
GDP growth (gross domestic product) rate is higher than what the Street had expected. A Reuters poll of more than 35 economists estimated the economy to grow 6.9 per cent in the October-December quarter.
China had recorded a growth of 6.8 per cent in the December quarter.
India's GDP growth had fallen to a three-year low of 5.7 per cent in the April-June quarter due to destocking in the run-up to the July 1 launch of the GST (goods and services tax) and a lingering impact of demonetisation. But in July-September quarter, the economic growth picked up to a revised 6.5 per cent annually.
Meanwhile, for the fiscal year ending March 31, 2018, the government revised its GDP growth forecast higher to 6.6 per cent from 6.5 per cent earlier.
Ahead of the data release, economists polled by Reuters had expressed concerns about the increase in non-performing assets (NPAs) of state-run banks, and said if they are not handled effectively it would hurt economic activity.
Adding to those worries, the second biggest state lender, Punjab National Bank (PNB) this month revealed a loan fraud that's the biggest in India's banking history.
The fraud has cast a shadow over the workings of state-run lenders, already reeling from accumulated bad loans accumulated that are higher than those of banks in most major economies.
During the December quarter, the gross valued added (GVA) for manufacturing grew at 8.9 per cent higher than 6.9 per cent in the previous quarter. Similarly, the farm sector GVA grew at 4.1 per cent compared to 2.7 per cent in the previous quarter. The construction sector recorded a growth of 6.8 per cent, higher than 2.8 per cent in previous quarter. The services segment including financial services grew at rate of 6.7 per cent up from 6.4 per cent in previous quarter.
Separately, infrastructure output grew by a strong 6.7 per cent in January from a year ago, government data showed on Wednesday. The growth in output compares with an upwardly revised 4.2 per cent year-on-year growth in December. Infrastructure output, which comprises eight sectors such as coal, crude oil and electricity, accounts for nearly 40 per cent of industrial output.
According to reports, economists widely expect India's GDP growth to accelerate further in 2018. "Settling down of Goods and Services Tax (GST) reforms will boost growth in next fiscal year," said Anita Gandhi, a director at Arihant Capital Markets.
Moody's Investors Service estimates India to grow at 7.6 per cent in calendar year 2018 and 7.5 per cent in 2019, amid signs of economic recovery from impact of demonetisation and GST.
The International Monetary Fund (IMF) projects India's GDP to grow at 7.4 per cent in 2018 as against China's 6.8 per cent. The IMF's update, released in January, projects a 7.8 per cent growth rate for India in 2019.
(With inputs from agencies.)...