Moody's cuts India's projected growth rate for 2018

Moody's cuts India's projected growth rate for 2018

During the previous quarter of October-December 2017, the economy grew by 7.2 per cent growth.

Finance Secretary Hasmukh Adhia said in a tweet that the constant increasing trend of quarterly GDP numbers in the four quarters of 2017-18 indicate that the structural measures of reforms undertaken by government is now bringing rich dividends in the form of higher GDP growth rate.

Gross domestic product expanded an annual 7.3 percent in the first three months of 2018, the May 24-29 poll of 55 economists predicted, a touch faster than the 7.2 percent achieved in the last three months of 2017 - and well above China's pace of 6.8 percent for the quarter ending in March.

Though the farm GVA output growth was well above satisfactory mark of 4 per cent at 4.5 per cent in fourth quarter, it was lower than 7.1 per cent a year ago.

The construction sector's growth rose to 11.5 percent compared with 6.6 percent in the previous quarter.

The OECD expects the world economy to grow by over 4 per cent over the next year on the back of low interest rates and other support from the governments. The government's Economic Survey, issued in January, estimated that every $10 per barrel rise in global oil prices cuts growth by 0.2-0.3 percentage points. He emphasized that this is the development under leadership of Prime Minister Narendra Modi and Union Minister Arun Jaitley.

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He said he did not see any correlation between oil prices and GDP growth and the fiscal deficit would remain as per the targets. The moderation in growth was driven by impacts from successive policy shocks of demonetization and the Goods and Services Tax; and the twin balance sheet problem of high corporate leverage and banks' stressed balance sheets.

Mining sector experiences a growth of 2.7 percent as against 1.4 percent in third quarter.

"Seems like we have moved beyond the teething troubles related to GST implementation", said Tushar Arora, a senior economist at HDFC Bank. "The pick-up in investment activity is also a good sign".

The growth in GVA was widespread led by public administration, which saw growth of 13.3 percent year-on-year. "The banking sector remains in a fragile state, and such problems have the potential to derail the ongoing growth recovery".

With the release of the latest figures, the country has again retained fastest-growing economy tag once again in the January-March quarter. However, we expect tighter financing conditions, rising oil prices and slower investments in the run-up to elections to slow GDP growth later in the year.

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