India shining: High GDP, core sector growth, fiscal consolidation

industryThe Indian economy has started looking good, with a robust growth, a spurt in the core sector data, and steady fiscal consolidation.

According to an official release by the Central Statistics Office (CSO) on Tuesday, gross domestic product (GDP) grew 7.9 per cent in the last quarter of 2015-16, thus pushing expansion in the fiscal to 7.6 per cent, the highest in the last five years. Buoyed by good growth, and expecting a good monsoon, the government exuded optimism and said that it could be 8 per cent in this fiscal.

The eight core industries, with nearly 38 per cent weight in the index of industrial production (IIP), expanded 8.5 per cent in April. Growth in the sector during 2015-16 was 2.7 per cent.

More good news was from the fiscal front. The provisional accounts for 2015-16, released by the government, showed fiscal deficit at 3.9 per cent of GDP as estimated both in budgetary and revised estimates. “This is a significant improvement over the fiscal deficit of 4.1 per cent in 2014-15 and 4.7 per cent in 2013-14,” the official release said.

Further, revenue deficit has also shown significant improvement due to increase in capital expenditure of the Central government. Revenue deficit, which stood at 3.2 per cent of GDP in 2013-14, improved to 2.9 per cent in 2014-15 and 2.5 per cent in 2015-16. The capital expenditure too increased substantially to Rs 235,253 crore in 2015-16, an increase of Rs 38,572 crore over 2014-15 and Rs 47,578 crore over 2013-14.

“Growth rate in the 4th quarter of 2015-16 at 7.9% almost hits the magical 8% mark. Good days ahead,” NITI Aayog Vice Chairman Arvind Panagariya tweeted.

Manufacturing and farm sectors grew 9.3 per cent and 2.3 per cent, respectively, during the fourth quarter. It may be recalled that agriculture had contracted in 2014-15; for the entire last 2015-16, growth was low in the sector, at 1.2 per cent.

Commenting on GDP numbers, Economic Affairs Secretary Shaktikanta Das told PTI that India can move towards 8 per cent growth with better agriculture production. “The various measures that the government has been taking in the last couple of years is beginning to show results and overall there are greenshoots… this year hopefully with good monsoon we should look at a growth closer to 8 per cent.”

Finance Secretary Ashok Lavasa said, “We should work towards seeing this [GDP growth] number grow. We are focusing on capital spending in infra and social spending.”

GDP at current prices for the year 2015-16 is estimated at Rs 135.76 lakh crore, a growth rate of 8.7 per cent over the first revised estimates of GDP for the year 2014-15 of Rs 124.88 lakh crore, released on January 29.