GDP Driver’s

  • Indian Economy grew at 8.2 Percent in April – June quarter of 2018-19 on strong performance of manufacturing and agriculture sector’s increasing its lead over china to remain the world’s fastest major economy.
  • According to the government data, the GDP at constant prices had grown at 5.6% in the April – June quarter of last fiscal.
  • The Previous high quarterly GDP growth was recorded in January – March of 2015-16 at 9.3%.
  • India’s GVA of the quarter under consideration has been estimated at 8% also the CSO said that manufacturing activities expand at the rate of 13.5% in the quarter under review.

Reasons for the Robust growth:

  • The Growth rate post – demonetisation and GST has shown a steady pace quarter to quarter because of the following reasons
  • Heavy government spending, especially state governments on infrastructure and government spending on Utility services (Providing electricity, construction of houses).
  • Agriculture showing a positive sign of revival with a growth rate of 5.3% will in turn benefit the manufacturing sector and expand it.
  • Manufacturing in this quarter also grew at consistent rate.
  • FDI inflows along with consumption expenditure is good.

Areas of Concern:

  • The future prospects depend upon the certainty of following factor’s
  • Private investment remains in certain both from domestic and foreign.
  • Externalities from Trade war between two economic giants the USA and China and retreat of USA as a global engine of growth and china not ready to take this ride.
  • Widening current account deficit, which has resulted due to costly imports of goods like Crude oil and Gold and Jewellery.
  • The Depreciation of rupee has made import costlier and no significant strides from exports.
  • The Widening of fiscal deficit due to excessive government spending.
  • The Upcoming year is an election year and there are every chances of policy paralysis which could halt the growth momentum.

Way Ahead:

  • Focusing on improving exports especially from agricultural products which has an evergreen demand, will boost export and employment.
  • Labour reforms should be initiated example the world’s largest Samsung plant faced protests from its worker’s
  • NPA reforms and resolution holds the key for reviving private investments so it should be fast tracked.
  • Reducing some imports, which are unwanted like some Jewellery will help contain current account deficit.
  • Fast Tracking the Process of divestments and addressing the exit problem will set the growth rate.
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