Business | Economy
India growth rate goes for a gallop
India's economy expands 8.8 per cent in fiscal first quarter, fastest growth rate in nearly three years
- By Himendra Mohan Kumar, Staff Reporter
- Published: 00:00 September 1, 2010
-
It's positive news amidst a recession to all Indians
Ben Daryl, Dubai, United Arab Emirates
Abu Dhabi: India's economy expanded 8.8 per cent in the fiscal first quarter, its fastest growth rate in nearly three years on the back of strong manufacturing growth and better farm output.
At a time when global economic recovery is showing signs of faltering, official data released in New Delhi yesterday showed the country's gross domestic product (GDP) growth in the April-June quarter was higher than the 8.6 per cent growth in the previous quarter.
"GDP growth data for the first quarter fiscal year 2011 released earlier today came in as per expectations, printing in at a strong 8.8 per cent against six per cent during the same time last year," said Abheek Barua, chief economist for HDFC Bank, yesterday.
"While industrial growth was lower than our expectations of 11.3 per cent, both agricultural growth and services growth surprised to the upside. Industry grew by 10.3 per cent on the year in the period against 4.6 per cent a year ago while agricultural growth printed in at 2.8 per cent [against 1.9 per cent a year ago] and services growth printed in at 9.7 per cent against 7.9 per cent a year ago."
However, he cautioned against some downside risks to economic growth ahead.
"Notwithstanding the data issues, the demand-side breakdown of GDP does expose potential risks to growth going ahead. Some of this slowdown can be attributed to high inflation," he said.
"The rest is attributable to the lack of adequate growth in private retail credit which is likely to assume greater significance in assisting growth as the impact of last year's fiscal stimulus measures dissipates," Barua added.
Tarek Qaqish, fund manager with Dubai-based Al Mal Capital, said the strong economic growth rates in India and China will create more demand for the global production of manufactured goods.
"It's also positive for oil prices and will help increase the oil export revenues of GCC countries," he added.
Yesterday's data underscored continued growth momentum in Asia's third-largest economy amid a slowing pace of global recovery. The robust growth bolsters the case for further interest rate increases and some bond dealers anticipate a 25-basis point rate rise already at a September 16 Reserve Bank of India (RBI) policy review.
The RBI has raised interest rates four times since mid-March and has said it may have to give precedence to containing inflation over other policy objectives. Policymakers are confident India will meet growth targets in the current financial year.
"On the whole, the projections that we have been making of 8.5 per cent stays; it could be a little better," said Montek Singh Ahluwalia, deputy chairman of India's Planning Commission, after the data was released.
With agency inputs
What do you think is the reason behind India's economic growth? Are you thinking of investing in businesses in India now? What sectors would you get into? Let us know at readers@gulfnews.com
Comments (1)
|
|
More from Economy
More from Business
Business Editor's choice
-
‘Wrong Way' Krugman
The source of our economic malfunction lies with government-mandated bank regulations
-
Greek exit could make Eurozone stronger
Departure will show limits of bailouts and allow remaining members to act much more like a unit
-
UAE upholds values of free trade
Recently released statistics confirm an established fact, namely that of the UAE embracing the free trade principle in general and imports in particular
