New Delhi, February 8 India’s economic growth slowed in the last quarter of 2015, adding to pressure on Prime Minister Narendra Modi’s government to expedite stalled reforms in the next session of parliament when it presents its annual budget. Gross domestic product grew an annual 7.3 per cent in the October to December quarter, government data showed today, less than an upwardly revised 7.7 per cent in July to September but in line with the forecast in a Reuters poll of economists. That rate of growth was faster than the 6.8 per cent posted by China in the same quarter, although many economists say the official data continues to overstate the economy’s strength. They point weak exports, railway freight, cement production, investment and flat order books as evidence of weakness. New Delhi also forecast that GDP growth for fiscal year 2015-16 would accelerate to 7.6 per cent from a revised 7.2 per cent a year earlier. For that forecast to materialise, however, the economy would have to grow at a rate of 7.8 per cent in three months through March. Worryingly for Finance Minister Arun Jaitley, who unveils his budget at the end of February, nominal growth — which drives tax revenues — is weakening due to global commodities slump. That will make it harder to contain the government’s borrowing needs. India’s GDP data has been under scrutiny since last January when statisticians unveiled new methodology they say better captures value addition in the goods and services supply chain. The new readings transformed the lumbering South Asian giant overnight into one of the fastest growing major economies. Today’s data did little to put those doubts to rest and if anything, raised further questions about its accuracy. Economic growth for April to June quarter, for example, was surprisingly marked up to 7.6 per cent from a provisional seven per cent reported earlier. Annual manufacturing growth of 12.6 per cent in the December quarter contrasted with other indicators — such as corporate order books, inventory ratios and factory capacity utilisation — that all pointed to weakening momentum. “The data looks difficult to correlate,” said Shubhada Rao, chief economist at Yes bank in Mumbai. India’s Chief Statistician TCA Anant defended the figures, saying sales may be slow but profits are rising. Asia’s third-largest economy is widely viewed as a beacon of stability in an uncertain global economy, with weaker commodity prices helping to cool India’s inflation and improve its fiscal and external balances. But Modi’s struggle to win bipartisan support in parliament for long-pending land, labour, bank and tax reforms has begun to take a toll on investor confidence. India’s benchmark BSE stock index hit an all-time high last March on hopes of speedier reforms but now has given up nearly all those gains. With no signs yet of a rapprochement between the ruling Bharatiya Janata Party and the opposition Congress party, parliamentary session that begins on February 23 is not expected to be very productive. That puts the focus on Jaitley’s third annual budget on February 29, which is expected to include measures to address rural distress and boost investment.
Delhi sees higher growth even after economy loses steam
Published: 07:12 am Feb 09, 2016