India has overtaken China as the fastest growing major economy in the world, expanding by 7.3pc at the end of 2015 and cementing its position as one of the sole bright spots in a flailing global economy.
Economic growth is now expected to hit the high of 7.6pc in 2016, according to Delhi’s Central Statistics Office, higher than the 7.2pc reached in 2014. India’s quarterly growth, measured from the three months to December, was in line with expectations, and outstripped China’s 6.9pc at the end of last year.
India’s growth numbers have been the beneficiary of a major statistical revision carried, which propelled GDP growth from 4.7pc to 6.9pc for the 2013-14 fiscal year.
However, the country has also been feted by the likes of the International Monetary Fund, which projects GDP growth of 7.5pc over the next two years.
The collapsing price of oil has acted as a major boon for the world’s second most populous nation, and has helped tame the food price inflation that has long plagued the economy.
Growth prospects have also been bolstered by the election of the pro-market government of Narendra Modi in May 2014. Mr Modi has promised to introduce landmark reforms such as a goods and sales tax and lure massive foreign investment in a country that has suffered from weak infrastructure and instutitional intertia.
Mr Modi’s ambitious reform blitz will now be “critically important for the unleashing of growth potential that India has to offer”, Christine Lagarde, managing director of the IMF, said last week.
“The drivers of growth from the data suggests that government spending and consumption spending are really strong,” said Prasanna Ananthasubramanian, chief economist at ICICI Securities.
While China’s authorities have been grappling with a managed slowdown, India has stood out as one of the world’s last remaining growth stars on account of its young population, reformed central bank and growth-oriented government.
The total size of the Indian economy is now set to surpass Japan and Germany combined by 2019.
But economists worry the drivers of growth, including motor vehicle sales, bank lending and investment, have all been falling in recent months.
“India is not the fastest growing economy in the world,” said Ritika Mankar Mukherjee, an Ambit economist in Mumbai.
“No matter how you cut it, while there are certain segments of the economy holding up such as IT or e-commerce, large parts of the economy are actually slowing down.”
By MEHREEN KHAN Feb. 8, 2016 on The Telegraph.
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