India's economic growth surges to 8.2%

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Gross domestic product in the country grew 8.2% year-over-year last quarter, according to government data out Friday, up from 7.7% in the first three months of 2018.

The latest figures, which mark India´s highest growth rate in eight quarters, shot up from 5.6 per cent for the same period a year ago and reinforces the country´s status as one of the world´s fastest growing economies.

He also stated that the focus on boosting capital spend in infrastructure sector and multiple initiatives to provide universal access to basic goods and services has not only contributed to this growth but has improved its quality as well.

The financial, real estate and professional services sector growth rate has declined to 6.5 percent as compared to growth of 8.4 percent and Public administration, defence and other services growth rate has declined to 9.9 percent as compared to growth of 13.5 percent in Q1 2017-18.

Other leading indicators of economic activity such as passenger and commercial vehicle sales have recorded strong double digit growth in the first quarter of the year.

Gross Value Added (GVA) for the given quarter rose by 8 percent as against 5.6 percent in the same quarter of previous year.

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The latest GDP growth figures are markedly higher than those of the Chinese economy which grew at 6.7 per cent rate in the same quarter.

The index of industrial production (IIP)-the broadest approximation to measure activity across India's factories-has grown at 5.2 percent during April-June 2018 compared with 1.9 percent in the same period past year. The Reserve Bank of India, which has increased interest rates twice since June to curb inflation, expects the economy to expand 7.4 per cent in fiscal 2019.

"While the worst appears to be behind us, there could be some headwinds to growth going forward", said Indranil Pan, chief economist at Mumbai-based IDFC Bank Ltd.

Earlier, in the first three months of 2018, India reported 7.7 per cent annual growth, the fastest in almost 24 months. There is a sense in the market that as and when the investments and exports pick up, Indian economy will start delivering high growth rates on a sustained basis. "These are essential for growth and what we see today is a result of all the reforms, including the ease of doing business, " he said.

Enthused by the data, Finance Minister Arun Jaitley said that the growth in the economy represented the potential of "New India".

Government spending grew 12.7 percent year-on-year compared with a 1.5 percent year-on-year growth in the March quarter. As The Wire has pointed out, GVA has over the last few years become a more important measure of economic growth as it removes the impact of subsidies and indirect taxes.

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