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 year.In fact, the Q1 GDP growth is far ahead of estimates by the RBI and the chief statisticians office.
Economists say the Q1GDP data is a clear indication of a bounce-back although the numbers may have got a boostbecause 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 not in a good shape, with more than 85per cent of the FY19 fiscal deficit target breached in the first five months itself.On ET NOWs India Development Debate economists and political party leaders analysed the state of the economy.
Here are the highlights from the discussion:PANEL VIEWNILESH SHAHMD, KOTAK AMCConsistently 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, CHINTANI 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 BHUSNURMATHCONSULTING EDITOR, ET NOWI will be much more cautious in my estimation on growth going forward.
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 ALAGHECONOMIST AND FORMER UNION MINISTERThe 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 showing.
The rate of capital formation to GDP is still low.