India remained the fastest growing major economy of the world for a second straight quarter, with GDP growing at 7 per cent during April-June 2015 against 6.7 per cent in April-June 2014. Growth in the previous quarter, January-March 2015, was, however, higher at 7.5 per cent.
Data released the Central Statistics Office (CSO) on Monday showed marginal improvement in private consumption expenditure but gross capital formation rate — a barometer for investments — continued to decline. It was down to 27.8 per cent from 29.2 per cent in April–June 2014.
“Although the economy has been moving in the upward direction the climb has been slow and there are no perceptible signs that there is going to be a quick and sizeable increase…industrial and investment recovery is yet to materialise,” said Care Ratings Chief Economist Madan Sabnavis in a note.
A source at the CSO explained that growth would have been better had it not been for the poor rabi crop.
Growth during the quarter was driven primarily by the services sector. The manufacturing and construction industries recorded favourable growth too. The agriculture sector saw a decline, growing at a mere 0.6 per cent. Growth also slowed in the sectors ‘mining and quarrying’ and ‘electricity, gas, water supply and utility services’.
In terms of the gross value added, (GVA) growth was 7.1 per cent against 7.4 per cent in April-July 2014. The revised methodology for GDP (Gross Domestic Product) calculation subtracts subsidy and adds taxes to the GVA to arrive at the GDP.
The Modi Government’s budget announcement of higher public spending this financial year did not reflect in the data released as at growth was low at 2.7 per cent in ‘public administration, defence and other services’.
India had overtaken China as the world’s fastest growing major economy in the January-March quarter, growing 7.5 per cent against the neighbouring economy’s rate of growth of 7 per cent.
The International Monetary Fund forecast in July that India will grow 7.5 per cent in the current year, compared with China’s 6.8 per cent, an average 4.2 per cent for emerging markets and 3.3 per cent for advanced nations.
