India's economy grows 8.2% in Q1 beating all estimates

India's economy grows 8.2% in Q1 beating all estimates

India's economy grew at a handsome 8.2% in the first quarter (April-June) of the current financial year backed by a strong performance in employment generating sectors like of manufacturing, construction and agriculture sectors.

A farm loan waiver in the past as many months too gave a boost to consumer spending in the first quarter, the government data showed.

Agriculture too grew at an unexpected 5.3% in the April-June period despite an unhealthy Rabi crop output this year. But the fine print of the GDP data showed a higher farm sector performance was because of a robust over 8% growth in fisheries, forestry and livestock segment.

Manufacturing sector grew at 13.5% in the first quarter, power sector output was up 7.3%, the construction sector grew at 8.7% in the period under review.

However, services sector, the mainstay of Indian economy after agriculture, grew less than last year. In the services segment, public services came down dramatically.

The unexpected acceleration in the economy came only a day after Finance Minister Arun Jaitley expressed his optimism about India taking over Britain next year and logging into the fifth place in the world.

Earlier this year, India's $2.6 trillion economy outperformed France to be the world's sixth largest in terms of size.

However, the 8.2% growth in the GDP in the April-June period came on a lower base of 5.6% in the same period in last year (2017-18).

Former finance minister P Chidambaram was quick to comment that the first quarter growth rate of 8.2% chased the lowest base of the last eight quarters or from the beginning of the financial year 2016-17.

Going forward, he said, the base effect would not be so favourable. “When we reach Q3 and Q4, the rate of growth may decline and the annual growth rate may be more or less like last year's,” Chidambaram said.

Economists like Soumya Kanti Ghosh of SBI and D K Joshi of Crisil too shared the same sentiments.

Prior to this, the economy had grown at 8.1% in the first quarter of 2016-17. Thereafter, it continued to perform below 8%.

However, the government said that the V- shaped recovery of growth in Indian economy was complete now and that India should grow at a robust and steady pace in 2018-19 remaining the fastest economy in world.

China had reported GDP growth of 6.8% for the June quarter.