India's economy grows 7.7% in Q4; FY18 GDP grows at 6.7%

Powered by strong growth in agriculture (4.5 per cent), manufacturing (9.1 per cent) and construction (11.5 per cent), the fourth quarter GDP growth reached the fastest for the Indian economy since April-June 2016-17.

However, growth rate for the previous three quarters of the 2017-18 fiscal has been revised downward, although the economy still managed to keep its full-fiscal growth for FY2017-18 at 6.7 per cent.

The growth rate for the previous quarter (October- December) has been revised to 7 per cent from 7.2 per cent.

Government data released on Thursday evening showed that GDP grew at the highest rate since second quarter (July- September) of the fiscal year 2016-17, the quarter before the government demonetised old currency notes of face values of Rs500 and Rs1,000. This figure is also a notch above the government’s own estimate of 6.6 per cent, but lower than the 7.1 per cent of 2016-17.

“(This) shows that the economy is on the right track & set for even higher growth in the future. This is the #SahiVikas under leadership of PM @NarendraModi ji & @ArunJaitley ji,” tweeted union minister Piyush Goyal after the growth numbers were released on Thursday.

Construction, manufacturing and agriculture were the main contributors to growth in the fourth quarter. The agriculture, manufacturing and construction sectors grew at 4.5 per cent, 9.1 per cent and 11.5 per cent, respectively, in the fourth quarter.

The government also said it would not lower the estimate for the current fiscal. “I don’t think we are revising our forecast for the current year 2018-19 which was indicated at 7.5 per cent,” economic affairs secretary Subhash Chandra Garg told reporters here on Thursday. “We retain it at this moment at this level. There has been some downward revision by Moody’s and others, taking oil prices into consideration, but there is no one-to-one relation between oil price and GDP growth.”

Garg’s comments came after global rating agency Moody’s on Wednesday cut India’s 2018 growth forecast to 7.3 per cent from the previous estimate of 7.5 per cent, citing higher oil prices and tighter financial conditions.

Finance secretary Hasmukh Adhia said the increasing trend of quarterly GDP numbers indicates that the structural reform undertaken by the government has begun paying rich dividends. “What is most noticeable is the increase in the Growth Rate of GVA of the manufacturing sector in the last two quarters of 2017-18 at 8.5 per cent and 9.1 per cent at constant price. We would like to believe that GST has given a big boost to the industrial sector,” Adhia tweeted.

Economists expect India's economy to grow more than 7% in 2018-19

On the fiscal front, the government has managed to stick to its revised budget estimate (RBE) of 3.5 per cent of GDP.

According to data from the Controller General of Accounts, the fiscal deficit stood at Rs5,91,000 crore, or 99.5 per cent of the RBE. The gudget, in February, had revised the fiscal deficit target for 2017-18 to 3.5 per cent from the earlier estimate of 3.2 per cent.