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Q. India’s GDP Growth: Comment on recently released provisional estimates data on India’s economic growth.
Jun 01, 2016 Related to : GS Paper - 3

Ans :

In news-

Recently Central Statistics Office (CSO) has released the provisional estimates of national income for the year 2015-16, and the estimates of gross domestic product (GDP) of the same year including GDP of fourth quarter of the 2015-16.

Key features of released data-

  • The per capita income during 2015-16 is estimated to have attained a level of Rs 93,293 as compared to the year 2014-15 of Rs 86,879 showing a rise of 7.4%.

  • India’s GDP registered a 7.9% growth for the last quarter of 2015-16, it is a healthy increase from 7.2% witnessed in the third quarter.

  • For the financial year 2015-16, the country’s GDP grew by 7.6% in comparison to the 7.2% growth in fiscal year 2015-14.

  • The agriculture sector grew 1.2% compared to the advance estimate of 1.1 per cent. The sector contracted 0.2% in last year.

  • Manufacturing grew 9.3%, much higher than the 5.5% in 2014-15. 

  • The consolidated services sector grew 8.8%.

  • Final private consumption expenditure grew at 7.4% compared to 6.4 per cent in the previous year. 

  • The gross fixed capital formation (proxy for investment) contracted 1.9% in the fourth quarter of 2015-16.

Analysis-

  • By observing the above data, it would certainly suggest there is a growth momentum in Indian economy. India is now the fastest growing economy with GDP growth at 7.6% in 2015-16. The above growth numbers reinforces India’s position as the world’s fastest-growing large economy.

  • Healthy growth in some corporate sectors, manufacturing and farm sectors have played great role in India’s growth momentum. The eight core sector data indicated momentum in the economic activity as it grew at rate of 8.5% which is highest in last few years.

  • In the current global economic scenario, this is a commendable performance and comes on the back of comprehensive reform measures undertaken by the Indian government.

  • With 7.6% growth rate in 2015-16, India also outpaced China’s 6.7% growth in the same period.

Issues-

  • Though above data shows growth in certain sectors, Indian economy is still on the path of recovery. As per figure, consumption is moving up, but investment levels were still low. 

  • Declined investment shows the signs of overstretched corporate balance sheets. That meant growth was largely consumption led despite rural distress.

  • Even though manufacturing sector witnessed growth of 9.3%, but it is a marginal decrease over the 9.5% in the advance estimates.

Conclusion-

With such a high growth number as seen above, India has managed to retain its tag of the world’s fastest growing major economy. Now government wants to see GDP growth of about 8% for financial year 2016-17. For that it needs improve the investment climate and should boost the manufacturing sector more effectively. With more investor friendly investment policies, supported by flagship Make in India programme and hope of better monsoon, India’s economy will expand I coming years even at faster pace.


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