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Last updated: 04 Dec, 2018  

India.Growth.9.Thmb.jpg GDP growth, debate and development

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Bikky Khosla | 04 Dec, 2018

GDP growth for the second quarter of 2018-19 fell to 7.1% from 8.2% in the previous quarter. While this growth is higher than the 6.3% rate registered during the corresponding quarter of last year and also faster than that of China during the same period, it is still the lowest in last three quarters. The Centre has blamed a higher base effect and higher crude prices for this. PM's Economic Advisory Council Chairman Bibek Debroy saw a positive trend in these figures. But a top government official termed it as disappointing.

So, people have differing reactions to the same set of data. Interestingly, the latest data came amid the ongoing controversy over Modi government’s recent revising down of UPA era GDP growth rates for the 2006-2012 period to 6.9% from 8.2% per year, based on the back series of GDP adopted by the Central Statistical Office in 2015. This revision junked the narrative by many popular accounts that India had recorded unprecedented economic growth during these years. Besides the political rivals of the government, many independent experts have raised questions about this revision.

Meanwhile, the second quarter GDP data shows that the manufacturing sector expanded 7.4% following 13.5% surge in the previous quarter. This decline, though on expected lines of some analysts, deserves attention of the government. The agriculture sector which grew 3.8% from 5.3% in the previous quarter also needs to be taken care off. On the overall growth rate, it should not be forgotten that though it looks somewhat respectable, India needs to grow 8%-plus to generate enough jobs for its ever expanding young labour force. Our politicians, instead of playing politics over GDP data, should focus on growth deliverables.

Last week also saw release of two more key data sets. First, output growth of the eight core industries accelerated in October to 4.8% from 4.3% in September. This mild growth was led by a healthy uptick in cement, coal and electricity. Second, the Nikkei India Manufacturing index showed that factory output in November rose to an 11-month high. Experts attributed this growth to stronger demand conditions and greater sales. These are positive developments.

I invite your opinions. 

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