P Chidambaram Sceptical Over GDP Growth Prospects In Coming Year

Moody’s Investor Service recently said the government was likely to miss its fiscal deficit target in 2018-19 due to higher than budgeted oil prices and rising interest rate scenario

The latest figures, which mark India's highest growth rate in eight quarters, shot up from 5.6 percent for the same period past year and reinforces the nation's status as one of the world's fastest growing economies.

Economic Affairs Secretary Subhash Chandra Garg said the robust performance this quarter gave hope that growth could exceed even estimates of 7.5 per cent this fiscal year. Analysts had forecast 7.6% growth. This is the highest economic growth for a quarter recorded in over two years.

India's economy grew at a stunning 8.2 percent in the first quarter of the 2018-19 financial year, official data showed Friday, as it charts a course to overtake Britain as the world's fifth-largest economy.

The ministry said that Gross Fixed Capital Formation (GFCF) at current prices stood at Rs 12.75 lakh crore in Q1 of 2018-19 as against Rs 11.20 lakh crore in Q1 of 2017-18. Amid such troubles, the GDP figures come as a relief to the government.

Similarly, construction, whose growth had plummeted to 1.8 per cent in Q1FY18, rose to a healthy 8.7 per cent in Q1FY19. "Possibly the buoyancy in agriculture is because of the allied activities".

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In Gaza, the Islamist group Hamas condemned the U.S move as a "grave escalation against the Palestinian people". The US has remained UNRWA's major benefactor and an end to American support for the agency could prove fatal.

Part of this slowdown can be traced to slower growth in public administration, defence and other services, which largely connote government spending.

A CNBC-TV18 poll predicted GDP growth at 7.7 percent. "Oil prices at current levels will raise expenditures and add to existing pressures on the fiscal position stemming from the lowering of goods and services tax (GST) rates on a range of consumer goods and a tax cut for small businesses as well as the relatively high minimum support prices (MSPs) set for this year", Moody's said. The government also revised the core sector growth figure for June to 7.6% and for May to 4.3%. While this shows a continuing process of economic recovery, the presence of base effect calls for caution in declaring that India has placed itself in a trajectory of 8% plus growth, he said.

Another important metric to watch for private investment - gross fixed capital formation (GFCF) - accounted for 31.6% of GDP during the quarter, higher than 31% in the same period previous year.

Workers assemble tricycles inside a manufacturing unit in Ahmedabad, India, August 30, 2018. "Given the challenges of higher interest rates, a weak rupee, oil price concerns, etc, we may expect some moderation in growth in the next few quarters", Sabnavis said.

"This is probably the best GDP trend we have seen in the first half of the fiscal year", said Shashank Mendiratta, India economist at ANZ Bank. "Q1 growth rate is based on the lowest base (5.6) in the last 8 quarters", he tweeted.

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