India’s GDP grows at 8.2%, cements its position as fastest growing economy

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The country's gross domestic product (GDP) growth rate for the first quarter (April - June) of fiscal year 2018-19 surged to a more than two-year high of 8.2 per cent, government data showed on Friday.

A Reuters poll, HDFC Bank's research and a CARE Ratings report are expected 7.6 percent GDP growth for the first quarter of current fiscal.

The GDP growth figure of 8.2 per cent means India is the fastest growing major economy in the world, and comes as a boost for Prime Minister Narendra Modi's government after demonetisation and GST had led to a slowdown in the economy.

"GDP at constant (2011-12) prices in Q1 of 2018-19 is estimated at Rs 33.74 lakh crore, as compared to Rs 31.18 lakh crore in Q1 of 2017-18, showing a growth rate of 8.2 percent". Rupee depreciation combined with a widening current account deficit is likely to increase the borrowing costs of corporate, say analysts.

Analysts say Friday's GDP reading could represent a peak if global growth starts to slow as a result of theescalating trade war between the United States and China. For the first three months of 2018, India reported 7.7 percent annual growth, the fastest in almost two years. The corresponding figure for the first quarter of 2017-18 was Rs 31.18 lakh crore.

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Earlier this year, India's $2.6 trillion economy surpassed France's in 2017 to be the world's sixth largest, according to World Bank data. Rising oil prices could also act as a brake on India, one of the world's top energy importers.

The Quarterly GVA at basic prices for Q1 2018-19 from "agriculture, forestry and fishing" sector grew by 5.3 percent as compared to growth of 3 percent in Q1 2017-18.

Construction activity, has also rebounded strongly, growing 8.7 percent in April-June, from 1.8 percent in the same quarter previous year, showing heightened activity in infrastructure, particularly road construction with strong multiplier effects across key sectors such as cement and steel.

"The outlook for the remainder of the year is not as optimistic", Priyanka Kishore, head of India at Oxford Economics, wrote in a recent note.

The growth in economic output in April-June was faster than the 7.7% growth the government had reported for the January-March quarter.