Indian economy grows 7.7 pct y/y in March quarter

The Singapore Strait is one of the world's busiest commercial shipping routes and vital to the city-state's economyMore

The Singapore Strait is one of the world's busiest commercial shipping routes and vital to the city-state's economyMore

The result exceeded the expectations of a survey of economists by Bloomberg, who predicted India's growth for January to March 2018 at 7.4 percent.

For the whole of fiscal year 2018, Indian economic growth decelerated to 6.7 percent from 7.1 percent. The promising growth figures came on a day when the ruling party suffered a big setback in bypolls.

Indian Prime Minister Narendra Modi stressed on Friday the importance of ensuring the freedom of navigation in Asian waters for free trade, days after pledging to help develop a strategic port in Indonesia.

"I don't think we are revising our estimates or the forecast for the current year, which is about 7.5%".

While that makes it one of the fastest-expanding major economies, the sustainability of the recovery is now in question as the nation battles a currency slump and faster inflation brought about by surging oil prices.

India's growth expanded to 7.7 percent in the fourth quarter of the financial year, official data showed Thursday, as Asia's third-largest economy continues to recover from the fallout of several disruptive economic initiatives.

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The 9.1% growth rate of net indirect taxes (taxes less of subsidies) took GDP ahead of the gross value added (GVA) at basic prices, which stood at 6.5% during the fiscal year, against 7.1% a year ago.

The growth in the "agriculture, forestry and fishing", "mining & quarrying", "manufacturing", "construction", and "financial, real estate and professional services" is estimated to be 3.4 per cent, 2.9 per cent, 5.7 per cent, 5.7 per cent and 6.6 per cent, respectively, the statement said. However, increasing quarterly year on year growth of manufacturing and construction throughout 2017-18 is encouraging. The country's economic growth was marginally higher at 6.9 per cent in 2016. "However, we expect these issues to moderate over the course of the year". The pick-up in investment activity (fixed capital formation) is also a good sign. This registered a growth of more than 14% YoY in Q4FY18, compared to negative growth YOY in the corresponding quarter a year back (Q4FY17).

The almost $1.7 trillion formal banking sector, which is coping with non-performing assets (NPAs) and emergence of fraud scandals, is worry point in the economy. But they have identified higher crude oil price and its impact on inflation, current account deficit and overall growth as risk factors that are expected to weigh on the RBI's (MPC), which meets next week.

Oil prices have fallen back in recent days after OPEC and Russian Federation signaled their readiness to start pumping more barrels after a meeting of the cartel next month.

Higher crude oil prices have already hurt the rupee, which slumped to near a record low this month. A re-escalation of trade tensions between the United States and China is another risk factor to growth.

The government spending-linked public administration segment's growth rose to 13.3 percent from 7.7 percent in December quarter.

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