Inspite of Global economic uncertainty, Indian’s Gross domestic product grew at 7.6% in the year ended March 2016, outstripping previous leader China and even faster than last year’s 7.2% (2014-15), in line with expectations.
Since the last 2 years of Modi governance, the economy’s spending on defence and infrastructure has certainly increased. In addition, the consumer demand has also risen thanks to lower interest rates. These factors attributed to positive business sentiments as well as higher consumer spending.
India’s growth was much ahead of fellow Asian giant China, which grew 6.7% in the March quarter – the slowest in the world’s second largest economy in seven years. Whereas, India’s GDP grew at 7.9% year-on-year in the March quarter, faster than the December quarter’s 7.2%.
There has been an upturn in private investment; the govt. boosted the capital investment by corporates through debt-fuelled higher public spending. Still, capital investment fell an annual 1.9 percent compared with a 1.2 percent growth in the December quarter.
Concern Areas in the Economy
Lower investment in the manufacturing growth, led to decline in manufacturing output, which moderated to 9.3% in the March quarter from 11.5% (revised down from the earlier estimate) in the third quarter.
The the government’s fiscal deficit in 2015-16 was marginally higher at 3.92% of GDP as against the targeted 3.9%.
Economists even point out to indicators signalling weak exports and sluggish railway freight.
However, most of the challenges can be dealt with – higher investment into the economy. The PM Narendra Modi is on the same agenda through the next visit to the United States in two weeks from now. We hope that both his visit and monsoons bring in good results for the country!
Source: Eco Times