12 Sep, 2014

Revival of Indian Economy

Indian economy grew by 5.7% in the first quarter of fiscal 2014-15 as compared to 4.7% on Y-o-Y basis & 4.6% on Q-o-Q basis, which is highest in past two and half years. It is both because of the pick up in demand and due to execution of policies and reforms by govt.



As per the data released by Central Statistics Office, manufacturing sector against the contraction of 1.2% in Q1 3013-14 has grown by 3.5% in Q1 2014-15.

Mining sector has shown the growth of 2.1% in Q1 of current fiscal as compared to contraction of 3.9% in the Q1 of previous fiscal year.

The growth in construction sector increased from 1.1% in Q1 2013-14 to 4.8% in first quarter of this fiscal. Agriculture sector grew by 3.8% compared to 4% a year ago.

Financial services sector has given the highest growth of 10.4% whereas electricity, gas and water came at second place with growth of 10.2 percent in Q1 2014-15.

Assocham President Rana Kapoor said, “It (the GDP) will only pick up further and the Indian economy is well poised to reach six per cent or may even cross the six per cent mark for the full financial year 2014-15.”

“The performance of the economy in the first quarter (Q1) of 2014-15 is broadly on expected lines… With improvement in some important sectors including manufacturing and exports, along with the measures taken by the government, the economy can be expected to show further improvement in the remaining part of the year,” Finance Minister Arun Jaitley said.

India Inc. has finally cheered after a long time. India Inc expects that as policy execution will increase the pace and reforms will start the GDP will further improve in coming period. Also, one should not forget that govt. spending was also a factor for GDP increase and in coming quarters the govt. spending will reduce as govt. has to achieve the fiscal deficit target of 4.1%. So, it will have some impact.

Good news is that the growth in exports is getting stronger & also domestic demand is picking up. Policy actions taken by NaMo Sarkar so far, has spread the positive mood in markets. Pace in policies and reforms by Govt. is being expected. All these factors combined will definitely lead to higher growth in coming period.

The crude price has come down substantially and the inflation has also come down to record levels. It will further help the economy to improve further. The only question thus arises if the revival trend sustains in coming period.

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