India regained the status of the world's fastest-growing major economy in the October-December quarter, driven by higher government spending and a pick-up in manufacturing and services. Gross domestic product or GDP grew 7.2 per cent in in the October-December quarter from a year earlier, according to government data released today. The growth rate is higher than what the Street had expected. A Reuters poll of more than 35 economists estimated the economy to grow 6.9 per cent in the October-December quarter. China had recorded a growth of 6.8 per cent in the December quarter.
India's GDP or gross domestic product growth had fallen to a three-year low of 5.7 per cent in the April-June quarter due to destocking in the run-up to the July 1 launch of the goods and services tax (GST) and a lingering impact of demonetisation. But in July-September quarter, the economic growth picked up to a revised 6.5 per cent annually, a return to a faster growth trajectory after five consecutive quarters of slowdown.
Meanwhile, for the fiscal year ending March 31, 2018, the government revised its GDP growth forecast higher to 6.6 per cent from 6.5 per cent earlier.
Separately, infrastructure output grew by a strong 6.7 per cent in January from a year ago, government data showed today. The growth in output compares with an upwardly revised 4.2 per cent year-on-year growth in December. Infrastructure output, which comprises eight sectors such as coal, crude oil and electricity, accounts for nearly 40 per cent of industrial output.
Economists widely expect India's GDP growth to accelerate further this year. Moody's Investors Service estimates India to grow at 7.6 per cent in calendar year 2018 and 7.5 per cent in 2019, amid signs of economic recovery from impact of demonetisation and GST.
The International Monetary Fund projects India's GDP to grow at 7.4 per cent in 2018 as against China's 6.8 per cent. The IMF's update, released last month, projects a 7.8 per cent growth rate for India in 2019.