INSUBCONTINENT EXCLUSIVE:
Growth engines are humming again
Indian economy expanded at a healthy 8.2per cent in the first quarter, led by the manufacturing sector, which grew by 13.5per cent during
April-June 2018.
The icing on the cake is the spike in farm growth, which stood at 5.3per cent versus 3per cent in the same period last
Economists say the Q1GDP data is a clear indication of a bounce-back although the numbers may have got a boost
because of the low-base
effect.
They also point to a pick-up in capital formation, which showed a growth of over 10per cent during the first quarter.
It is not all
good news for the economy though
The rupee continues its downward spiral, touching a new low of 71 to the dollar for the first time on Friday.
Government finances are also
Development Debate economists and political party leaders analysed the state of the economy
Here are the highlights from the discussion:
PANEL VIEWNILESH SHAH
MD, KOTAK AMC
Consistently from December 2017 quarterly results, we were
seeing business managements talking positive about the future
Their outlook is improving
We are also seeing rupee depreciation which will stop Chinese dumping
The real interest rate burden is coming down
Combine these two with good monsoon, there is an optimism for the economy
On the manufacturing side, two-wheelers and tractors had fantastic numbers
We will be able to achieve what the RBI had forecast
Overall, we are optimistic especially for the listed segments which we cover.
ARVIND VIRMANIPRESIDENT, FORUM FOR STRATEGIC INITIATIVE AND
PRESIDENT, CHINTAN
I first pointed out that the gross fixed capital formation was accelerating
GFCF growth rate has been consistently up
But forecast of this year depends partly on what is happening outside and the speed with which banking NPA problems is sorted out
Growth rate will be around 7.5per cent
The reason is largely global problems
Recovery with growth in exports also suggests that we will not lose from this China-US tariff war
Consumption was weak and it is now recovering.
MYTHILI BHUSNURMATH
CONSULTING EDITOR, ET NOW
I will be much more cautious in my estimation
If the US economy continues to grow at a robust pace like this, you might see the US Federal Reserve hike interest rates quite aggressively
and that would be bad news for us particularly at a time when the currency is already weakening
The kind of turmoil we are seeing on the currency front could compel the Reserve Bank of India to act as a party pooper.
YK ALAGH
ECONOMIST
AND FORMER UNION MINISTER
The value added growth which was what the GDP numbers are based on do tend to get revised because they are based
on very preliminary indicators
IIP, which is a far more solid base of looking at the problem, is showing a small increase but nothing of the kind which the GDP numbers are
The rate of capital formation to GDP is still low.
