Bringing some much needed cheer, the economy is estimated to have grown at about 5.5 per cent or more in the first quarter of the fiscal, marking the fastest growth in nearly two years.
“The calculations are yet to be completed but the uptick in industrial output as well as reasonable growth in the farm sector would have given a boost to growth,” said an official familiar with the development, adding that the low base effect would also give an impetus to GDP growth.
The economy grew at 4.6 per cent in the fourth quarter of last fiscal while it registered a growth rate of 4.4 per cent in the first quarter of last fiscal. The Central Statistics Office will release data on GDP growth rate for the first quarter of the fiscal on August 29.
Economic growth has been largely subdued marked by sub-5 per cent growth for the last two fiscals with the highest GDP growth registered in the July to September quarter of 2013-14 at 5.2 per cent.
Stuttering manufacturing growth that declined by 0.7 per cent in 2013-14 was largely responsible for the low GDP growth. But it has turned more upbeat and the index of industrial production expanded by 3.4 per cent in June and 5 per cent in May this year, remaining in the positive territory for three consecutive months.
“Agriculture growth in the first quarter is also expected to be good as it will be based on the last season. The impact of the poor monsoon this year will be felt later this year when it starts affecting crop planting and output,” said the official.
The optimism in the economy has also been reflected in recent government statements. Finance secretary Arvind Mayaram pegged GDP growth at 5.8 per cent in the current fiscal, a tad higher than the estimate of 5.5 per cent by the Reserve Bank of India.
Experts and analysts too are betting on a rebound in economic activities. British brokerage Barclays and Standard Chartered have both estimated that the economy registered a growth of 6 per cent in the April to June quarter of this fiscal.
“We expect GDP growth to have picked up to 6.0 per cent y-o-y in Q1-FY15 (quarter ended June 2014). This would be the fastest growth recorded since March 2012 and much higher than 4.6 per cent y-o-y in Q4-FY14,” Standard Chartered said in a research note earlier this month, attributing the recovery to improvements in industrial activity and services sector.