Any official data on the country’s economic performance is released only by Central Statistical Office (CSO). CSO comes under the Union Ministry of Statistics and Programme Implementation. Currently Mr Sadanand Gowda is the minister here.
The quarterly GDP performance figures for the first quarter (Q1) ended June 30 was released on the 31st August, 2018 (always released on the last day after two months of the past quarter). The recorded growth was 8.2 per cent in the April-June quarter. The growth is stronger than expected by the national as well as international observers.
This growth rate records the highest percentage of economic growth in over two years. The growth rate reconfirms that India, indeed, is the highest growing Large Economy (economies which have approximately USD 1 trillion or above of GDP). It is heartening to note that our economic growth is higher than China’s 6.7 per cent for the same quarter.
The contributing factors have been mainly growth in manufacturing, construction, farm sector and consumer spending. The CSO informed that areas such as manufacturing, electricity and gas registered growth of over 7 per cent during the Q1 period. If the broad based momentum continues, GDP growth for the current financial year 2018-19 could easily exceed estimates of 7.5%. This also means that reforms such as GST have started yielding results.
However, it should not be forgotten that the base (the last year’s growth percentage for the same period of 5.6%) for this growth was also low. But the quality of growth which is founded upon capital investments is very encouraging. These Capital Investments form almost one third of the GDP and are likely to produce good results quarter after quarter.
According to the economists, the growth rate could further accelerate the momentum as the government and the RBI are in the process of resolving bad loans of the banks.
“While the recent fall in the rupee is likely to provide some support to exporters, rising global protectionism and slower global growth might limit the pickup in exports this year. Therefore, the major support to growth needs to come from a sustainable recovery in private consumption and investment,” CARE Ratings said in a note ahead of release of GDP growth data release.
On the other side, on 31/8/18, the rupee went down to Rs. 71 per dollar. Rupee depreciation combined with a widening current account deficit is likely to increase the future borrowing costs for corporate as well as making the current repayments tougher.
Trade deficit widened to a more than five-year high of $18.02 billion in July, driven largely by a surge in oil imports. Though merchandise exports rose 14.32 per cent year-on-year in July (higher than the global average), the trade deficit widened as oil imports surged 57.41 per cent to $12.35 billion.
A higher trade deficit leads to widening of current account deficit – which is the difference between inflow and outflow of foreign exchange – on an annual basis.
