GDP or gross domestic product grew 8.2 per cent in the April-June period, government data showed on Friday. That marked the highest level of economic growth recorded since the July-September period in 2014-15, and cemented India’s position as the fastest growing major economy ahead of China’s 6.7 per cent. Strong performance in manufacturing and consumer spending contributed to the overall figure of 8.2 per cent. Friday’s GDP data marks the first quarterly report of the current financial year which began on April 1, 2018. The median consensus in a poll of 50 economists by news agency Reuters had put annual GDP growth at 7.6 per cent in Q1.
The Central Statistics Office (CSO) said in its statement that areas such as manufacturing, electricity and gas registered growth of over 7 per cent during the period.
In GVA (gross value added) terms, the GDP growth stood 8 per cent, it noted.
Stock markets edged lower on Friday, ahead of release of the GDP data. BSE benchmark index Sensex closed 45 points lower at 38,645.
“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.
The rupee on Friday declined to its lifetime low of 71 against the US dollar. Weakness in the dollar augurs well for exporters. Rupee depreciation combined with a widening current account deficit is likely to increase the borrowing costs of corporate, say analysts.
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, 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.
The Reserve Bank of India (RBI) had earlier this month retained its GDP growth projection for 2018-19 at 7.4 per cent, citing “evenly balanced” risks. In financial year 2017-18, GDP expanded at 6.7 per cent, lower than the 7.1 per cent recorded in the previous year.