In what seems to be a positive indicator for India, the country's Q4 FY18 GDP (January-March quarter) growth figure has increased to 7.7 per cent, beating estimates of an ET NOW poll which predict the number at 7.5 per cent. Data released by the Central Statistics Office (CSO) indicated that the economy is heading towards a positive direction.
Interim Finance Minister Piyush Goyal has said that, GDP growth has been increasing continuously every quarter with growth of 7.7 percent in the fourth quarter of 2017-18.
Briefing reporters in New Delhi this evening, Secretary, Department of Economic Affairs S C Garg said, GDP growth has been revised upwards from 6.6 percent. Similarly, construction sector GVA rose 11.5 per cent in the fourth quarter as compared to 3.9 per cent a year ago.
"GVA growth also escalated to 7.6% y-o-y from 6.6% in Q4, primarily driven by agriculture and industry".
In its May update of the Global Macro Outlook: 2018-19, Moody's cited higher oil prices and tighter financial conditions as the primary barrier to the growth rate.
The data may offer a boost to Prime Minister Narendra Modi, who is set to seek a second term next year. The strong growth was largely a combination of three factors - a pickup in manufacturing, construction and agriculture. Capacity utilisation remains at 75 per cent, an indication that investment activity has picked up but not across sectors. His government launched a nationwide goods and services tax (GST) but its introduction was botched, almost scuttling India's growth prospects in the near term.
It also highlighted an acceleration in rural consumption, higher minimum support prices and a normal monsoon to stabilize growth on the domestic front. "We should however be wary of the headwinds the economy faces in the coming quarters from higher crude prices feeding into inflation and rising inflation expectations".
The Indian government earlier this month sought assurances from Saudi Arabia, OPEC's biggest producer, that oil prices would remain "stable and moderate".
"We have cut our FY19 GDP forecast by 20 basis points taking into account rising oil prices and potential global trade wars", said Teresa John, economist, Nirmal Bang Institutional Equities in Mumbai.
India is rebounding from an economic slowdown, with growth seen at more than 7 percent, only to find itself ensnared by the volatility engulfing emerging markets.
Investment saw a growth of 14.4 percent year-on-year in the quarter, thanks to a step-up in public infrastructure spending.