NEW DELHI, May 31 (Reuters) - The Indian economy grew 7.7 percent year-on-year in January-March, its quickest pace in almost two years driven by higher growth in manufacturing, the farm sector and construction.
"Domestic dynamics are very strong and external volatility won't derail the current economic recovery", noted Hugo Erken at Rabobank, one of the most accurate forecasters on India GDP, and whose view is that growth reached 7.7 percent on a normal basis, well above the 7.3 percent median.
The GDP growth data released yesterday presents an optimistic picture of the economy, reflected in y-o-y growth for Q4, especially for construction and manufacturing sectors, Ficci President Rashesh Shah said. Demand seemed to have picked up on the back of a concerted increase in government spending, from 10.3 per cent of GDP in 2016-17 to 10.8 per cent past year at constant prices, perhaps largely on account of pay panel obligations.
After growth slowed sharply for much of 2017, India regained its status as the world's fastest-growing major economy for the October-December quarter.
The decline in the annual GDP growth has been mainly due to dip in manufacturing, agriculture and mining activities. For 2017-2018 it projected the economy to grow at 6.7 per cen.
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The construction sector's growth rose to 11.5 percent compared with 6.6 percent in the previous quarter.
However, services sectors such as trade, hotels, transport (6.8%) and financial services (5%) decelerated from their levels in the third quarter, signaling a lingering impact from disruptions caused by hasty implementation of the goods and services tax (GST) as well as the state of the banking sector.
Mining and quarrying did not perform well in January-March as GVA of the segment grew at 2.7 per cent in the fourth quarter, down from 18.8 per cent in the year-ago period.
Real GVA (at basic constant 2011-12 prices for 2017-18) is now estimated at Rs 119.76 lakh crore, showing a growth rate of 6.5 per cent over first revised estimates of GVA for 2016-17 of Rs 112.48 lakh crore. In terms of annual growth, GVA was at 6.5 percent. Its confidence stems from the pick-up in investment, which at constant prices has risen from 31.1 per cent of GDP in 2016-17 to 31.4 per cent in FY18.
A barometer of investment, the gross fixed capital formation (GFCF) at current prices is estimated at Rs 47.79 lakh crore in 2017-18 as against Rs 43.52 lakh crore in 2016-17. "Shows that the economy is on the right track and set for even higher growth in the future", Goyal said.