At a time when its
export-dependent emerging market peers are biting the dust, the Indian economy
seems to be going from strength to strength, with Q3 GDP data signaling solid
growth, a shot in the arm for the Modi government which is seeking to push
through key structural reforms stuck in Parliament.
At 7.3 per cent clocked in the
October-December 2015 quarter, growth in Asia’s third biggest economy remains
heads and shoulders above major global economies. While India, a net commodity
importer, is benefiting from an ongoing crude oil price collapse, oil-driven
economies such as Brazil and Russia are in steep recessions, and growth in
China has hit a 25-year low of below 7 per cent.
The centre has pegged India’s
economic growth rate for FY 2015-16 at 7.6 per cent, marking an acceleration
from last fiscal’s 7.2 per cent expansion.
A quick glance at Q3 GDP figures
shows that barring the farm sector which has been hit by a deficit rainfall for
a second year running, most sectors of the economy are in good shape with
manufacturing output surging 12.6 per cent and private consumption holding up
quite well. Moreover, Gross Value Added, a proxy for economic strength rose 7.1
per cent in Q3 FY 2015-16, year on year.
Going ahead, a lot hinges on the
government’s ability to stick to its fiscal deficit targets, the progress of
which will be unveiled in the upcoming Union Budget. Solid news on the fiscal
consolidation front could pave the way for further interest rate cuts. Further,
getting over the GST hurdle is also a big test that the NDA government
currently faces.
Latin Manhralal
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