India has taken over China to become the world’s fastest growing economy by recording a 7.5% GDP growth up from 6.6% in the previous quarter. During the same period China has recorded a growth of 7%.This growth can be attributed mainly to the improvement in manufacturing and service sector. The manufacturing sector output grew by 8.4% in the fourth quarter while the service sectors which includes trade, hotels, transport and communication reported a robust growth of 14.1%. However, Construction, mining and farm sectors underperformed in this quarter. The data showed that Construction declined to 1.4% while agriculture output contracted 1.4% because of the damage caused by unseasonal rains in March.
INDIAS’ ECONOMIC GROWTH-PAST PERFORMANCE
India’s economy has seen a considerable growth since its liberalization in the early 1990’s. India’s GDP growth has been well above five percent for the last ten years. Its GDP growth has been ranked eighth largest in the world in 2014. The retail sector contributes to about a quarter of the nation’s GDP. Agriculture and Mining Industry are also key industries contributing majorly to the economy of India. The IT industry in India is continuing to surge and contributing in a big way to the country’s overall GDP.
PERFORMANCE OF INDIA IN THE FISCAL YEAR 2014-15
The Indian economy expanded by 7.3% up from 6.9% a year ago pointing to the highest gross domestic product expansion any South Asian nation has seen since the year ended March 2011. Much of the growth is mainly due to the improvement in service and manufacturing sectors. The output for manufacturing roared up by 7.1%, while services such as finance, insurance and real estate continued to perform strongly, growing by 11.5%. However the, agricultural growth was restricted, at 0.2%.
(Source: Economic Times)
INDIA’s ECONOMIC GROWTH-A TRUE PICTURE?
The main question that arises, whether the GDP numbers that look so impressive show a true picture or not. Some experts are of the view that the numbers are not in line with the feedback received from the field. On the production side, agriculture, construction, banking and public services are have not signs of improvements. On the expenditure side, rural consumption, government spending and exports remain Moreover, the sharp downward revision in October -to -December quarter growth to 6.6% from 7.5% estimated initially have prompted analysts to raise questions on the sanctity of these growth numbers. The picture is clouded further as a new formula to calculate economic growth has been introduced by the Government.
EXPERTS TAKE ON THE FUTURE OF INDIAS ECONOMIC GROWTH
Chief Economic Advisor Arvind Subramanian expects the economy to do much better in the current fiscal year. However from the broader policy making point of view he still feels that India is a recovering economy and has not reached its true potential.
Nomura economist Sonal Varma expects the cyclical sectors to show a gradual recovery owing to higher disposable income, easier financial conditions, rising profit margins and continued momentum on project clearances .
Policy makers and experts feels with middling growth prospects in Europe, India can help pick up slacks even though currently it is contributing far less to the world growth rate than its northern neighbors whose GDP is $ 10 trillion .
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