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Last updated: 04 Sep, 2018  

Up.9.Thmb.jpg All is not well with GDP growth

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Bikky Khosla | 04 Sep, 2018

Gross Domestic Product (GDP) for the first quarter of the current financial year registered a robust 8.2 percent growth, according to official data released last week. This better-than-expected growth rate is a pleasant surprise, particularly for the Modi government amid the ongoing debate over its economic record versus that of the UPA government. The Prime Minister took no time to claim that when policies are correct, positive outcomes follow. Economists are, however, bit cautious while reading into these growth numbers.

This economic expansion in the first quarter is the fastest achieved since the January-March quarter of 2016. Now, India has again cemented its status as the world's fastest growing major economy, beating China, which has grown 6.7 percent during the same period. The latest GDP figures also stand out as it is powered by a strong performance of both manufacturing and consumer spending. In other words, our households are now buying more and our manufacturers are producing more as well, as reflected by 8.7 percent and 13.5 percent growth registered by these two segments, respectively.

It is equally encouraging to see healthy growth in agriculture and construction. The farm sector grew 5.3 percent, from 3 percent in the corresponding period last year, due to strong Rabi or winter sown harvest. Showing a similar trend, the construction sector grew 8.7 percent in April-June, from 1.8 percent in the same quarter last year, reflecting healthy growth in infrastructure, particularly road construction. These figures are no doubt strong enough to raise hope of a faster economic recovery in the coming months.

But a bit of a caution here. While the growth in private consumption, to 54.9 percent at constant prices in June quarter, from 54.6 percent in March quarter, is really impressive, the seemingly higher 10 percent growth in gross fixed capital formation (GFCF) is actually lower than 14.4 percent growth achieved in March quarter. In other words, there is a slowdown in gross capital formation or investment demand in June quarter. So, we have to wait further for investment-led demand to pick up.

I invite your opinions.

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why all is not well always blames modi for it?
not supporting modi but against of all pappus for sure | Wed Oct 17 01:04:18 2018
from when turns out to be economist? did tradeindia considers other factors like Indian economy is in transit with GST and banking sector reformations global markets are in crises of oil and us-china trade war ? we have to pay some price for Huge NPA loans on banking sectors which are given before 2014. it will be better if tradeindia stop tobe claiming on fears and do their actual work only. I was feeling tradeindia could be major platform other than indiamart but now i know why it is still not gaining popularity while you being economist other platforms actually working hard to serve sme for better big no for tradeindia for future good luck with your economical analysis !!!

Mismatch in GDP and ground realities
Bhagawath Prasad | Wed Sep 26 11:01:13 2018
Sir, I am not an economist but I have been in business for last 19 years hence I keep meeting many traders and customers , the mood today from all sections of small businesses is very disappointing , everyone says that the business is flat and degrowing , pressure from lenders have increased and it's unbearable , disruptions are driving business owners to shut the doors , operational expenses have increased , now , one should analyse, wether GDP numbers are important or an atmosphere to do business is important , in my opinion GDP numbers can always be tweaked by increasing production at certain segment and showing it on other side as consumption for headline management.

Agriculturre contribution in GDP Growth
Anil Kumar | Thu Sep 6 05:58:02 2018
even though agriculture sector achieved 5.3 per cent growth is not give surety to farming community for better return because price of agriculture commodities will fall so we need permanent solution particularly for farming community so they can get better return and will not move to other business if they will stop farming that is unimaginable situation.

GDP growth
Kunnakkattu J | Thu Sep 6 05:29:32 2018
It is fabricated one to declare pre election propaganda of 2019 election. One expert from panel itself disputed this figure. It is difficult to understand when the industrial productions, agriculture production, service and allied, employment , all are on doward trend. Only up is revenue that too on direct tax not GST indirect tax. This direct tax increase is of Income tax rule change and 7th pay commission which made more to tax payers.

All is not well with GDP growth.
Ashok Baride | Wed Sep 5 11:48:58 2018
Why give a misleading title to the article? Is it difficult to digest the progress? Lets be Rational ...rather than Rhetoric

S.K.Jain | Wed Sep 5 09:30:19 2018
The entire DGP calculation is cooked up and fabricated which is being prepared from time to time by people who has to justify their postings and salary and the purpose for which they have been placed there. GDP does not provide any fruitful data on a comprehensive basis. The GDP must reflect the overall buying power, happiness level among the common man, the purchasing power of the last poorest person of the nation, the health of the entire nation, the transparency in all govt. deptts., ministries.

GDP analysis
Arvind Gurav | Wed Sep 5 07:37:50 2018
Thank you for the analysis of GDP figure. It is encouraging and heartening. The deeper understanding cautionary note on GFCF is educative.

Is it real or just govt fake report of growth
Kumar | Wed Sep 5 07:12:17 2018
Govt showing that economic growth but in which sense.Is it count as Govt income which get from peoples who are facing problem to get food easily.Govt just declare tax & other things at night but have they paid tax on their income or other expenses which not useful to peoples lifes. Govt show that generate employment in market.But as my point of view just transfer job 1 place to other place but not generate new job.As example , in farm house working 5 peoples and 2 left work and start own shop then is they count as employment because they will earn money by shop person purchase & sell items.If really economic growth then must be all items in market will be cheap but now tax going to double & govt not even think to reduce tax.Whoever come in a power but BJP govt put peoples life in a more problematic than UPA.UPA govt time BJP put pressure on Dr Manmohan Singh to reduce tax.Now own govt come then minister say that state govt earn good money. More than 75% state in india have BJP govt but still they are not able to do anything for peoples. Even they can sit well with Big Industrialist & show photos.When small business people not pay tax then get notice or business problem.Why they not tell big industrialist to pay back bank loan.In UPA govt time,bank were facing money problem then do demonitization then after gst then after new currency then still backing charging much things on money which govt give to big industrialist .Mr PM is just doing marketing to make foolish to peoples

Capital Formation
Rasesh | Wed Sep 5 06:51:25 2018
I'm not an economist; however, don't you think that Capital Formation will increase only after capacity utilization, currently at 75% , reaches a certain threshold?

All is not well with GDP growth
Prithviraj | Wed Sep 5 06:47:38 2018
I have been reading your observations off & on. On when I find the time and off when I am in a rush. I find the views balanced with no hints of any political leanings. A number of positive steps have been initiated and I believe it will take a few more years for the dividends.The country has been divided politically and one should always look at any policy objectively keeping in mind the interest of the nation & its citizens. What I wish for is a lot of emphasis on agro based industries. Improving cold chain logistics, improve agriculture produce warehousing, a policy that looks to create an industrial revolution that is largely agriculture based. This I believe will be the answer to many of the woes, employment growth, urban migration, farmer suicides etc.

GDP Growth
Sajjauddin Kagji | Wed Sep 5 06:03:02 2018
Putting a positive outlook (may not actual) bring a positive attitude and ultimately have positive outcome... This psychological perspective must not be ignored

All is not well with GDP growth
Shekar | Wed Sep 5 04:42:37 2018
sir, thanks for throwing light on the GDP. We,the commonman are indeed going to be effected by the changes;the most negative tangible change will only be noticed by them. It will be interesting to know as to what % of the populationi is actually the working class as compared to china etc.,(Many children and sr citizens are also working albeit in the unorganized sector)

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