GDP growth: India at top spot among major economies; China remains second

The Indian economy continued to grow at a faster rate than China during the second quarter of the financial year (FY19), some rating agencies have estimated.

The growth rate was estimated between 7.2 percent and 7.9 percent. China's growth in the September quarter was 6.5 percent making India the fastest-growing major economy.

India's second-quarter growth rate is, however, slower than the record figure attained in the first quarter in and the growth could slow down further in the second half of FY19, a media report said citing the estimates. The 8.2 per cent growth achieved in the first quarter was the highest of nine quarters.

The continuing growth defied global headwinds including the high crude prices, a weaker rupee and an uneven monsoon in the second quarter of the financial year, the report in Economic Times said.

The federal statistics office is expected to release the GDP numbers for the quarter only on November 30.

Mild moderation

A pickup in construction, consumption and the improvement in the services sector offset the negative factors, the report said, citing the estimates. An indication was that the sales of commercial vehicles rose 37.82 per cent in FY19 first half.

Experts put down the quarterly growth to be in line with the full-year estimate of about 7.5 percent for FY19. Reserve Bank of India has pegged its FY19 growth estimate at 7.4 percent. The average figure of eight estimates from the agencies was 7.5 percent, according to the newspaper.

"We expect mild moderation in sequential growth as the base effect that partially boosted economic activity in the first quarter is wearing off," the newspaper cited Upasna Bhardwaj, an economist at Kotak Mahindra Bank, as saying. "However, the high-frequency indicators are pointing towards robust and stable growth in the second quarter."

Kotak Mahindra's GDP growth forecast is 7.9 percent and gross value addition (GVA) 7.7 per cent.

India Ratings said the monsoon must be seen as a major factor with farm activity picking up during the quarter across major agricultural areas of the country. "Monsoon has been average and that has impacted farm activity. So we expect agricultural growth to be lower than 5.3 per cent in the first quarter," Devendra Pant, chief economist at India Ratings, told Economic Times, forecasting 7.3 per cent quarter growth.

Industrial growth

India's industrial output grew 5.1 per cent in the first half with manufacturing growing 5.3 per cent compared with 2 per cent in the same period last year, as the Index of Industrial Production said.

"Notwithstanding our expectations of a muted agricultural growth, the announcement of revised minimum support prices, crop loan waivers, a pickup in construction activities in rural areas and staggered pay revision by state governments are likely to have supported consumption demand in the second quarter," Aditi Nayar, principal economist at rating agency ICRA, told the newspaper.

According to Subhada Rao, chief economist at Yes Bank, the improvement in services supported the second quarter growth.

On the other hand, HDFC bank's senior economist Tushar Arora said: "Compared to the spectacular 8 per cent-plus reading we observed in the first quarter, GDP growth for the second quarter is likely to show some moderation."