At 7.9% GDP growth in last quarter, India becomes fastest growing large economy in the world

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The March quarter GDP (gross domestic factor) growth grew to 7.9 percent versus a revised 7.2 per cent in December 2015.

The latest data is believed to be a lot better than widely estimated views by analysts, who predicted the growth to be close to be at 7.5 percent.

The news of the GDP growing at 7.9 percent coincides with Narendra Modi government completing two years in office.

“Momentum is building up faster than anticipated, and there is demand pick-up in the horizon. This definitely spells out a positive story that there will soon be a recovery in private sector capex,” Subhhda Rao, chief economist with Yes Bank, was quoted by NDTV.

Data released by the Central Statistics Office (CSO) said that the farm sector grew by 2.3 percent from a year ago compared with a 1.0 percent contraction in the December quarter.

Mining, according to an Indian Express report,  grew 8.6 percent in the March quarter, up from 7.1 per cent in the previous quarter.

Electricity, water and gas production registered growth of 9.3 percent from 5.6 percent in the December quarter.

The CSO, in a statement, said that it has revised the GDP data for the first three quarters released earlier from 7.6 per cent, 7.7 per cent and 7.3 per cent to 7.5 per cent, 7.6 per cent and 7.2 per cent, respectively.

Upasna Bhardwaj, Economist with Kotak Mahindra Bank, said, ““Another reason for the pickup in private consumption could be attributed to the heavy dividend payouts by corporates rather than increasing investment spending. Overall, the continued weakness in capital goods production and lack of capacity addition continues to remain a drag on growth.

“Going forward, better monsoons and seventh pay commission payouts are likely to remain supportive of consumption. However, private capex will likely remain the missing link for a few more quarters with growth continuing to be heavily reliant on government spending. We, therefore, see a gradual uptick in growth next year.”

The Economic, in its survey recently, had projected a wide band of 7-7.75 per cent growth in 2016-17, boosted by normal monsoon projection.

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