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India may retain fastest growing economy tag

The Central Statistics Office (CSO) will release the India’s gross domestic product (GDP) growth estimates for the 2015-16 on Tuesday. A Reuters survey of economists expected data out on Tuesday will show India’s gross domestic product grew 7.5% year-on-year between January and March, faster than the previous quarter’s 7.3%.

business Updated: May 31, 2016 11:41 IST
A Reuters survey of economists expected data out on Tuesday will show India’s gross domestic product grew 7.5 percent year-on-year between January and March, faster than the previous quarter’s 7.3 percent.(Illustration: Abhimanyu Sinha)
A Reuters survey of economists expected data out on Tuesday will show India’s gross domestic product grew 7.5 percent year-on-year between January and March, faster than the previous quarter’s 7.3 percent.(Illustration: Abhimanyu Sinha)

The Central Statistics Office (CSO) will release the India’s gross domestic product (GDP) growth estimates for the 2015-16 on Tuesday.

In its advanced estimates released in February, the CSO had forecast that India’s GDP would grow at 7.6% in 2015-16, faster than the previous year’s 7.2%, but nearly one percentage point lower than earlier forecasts.

The country’s “real”, or inflation-adjusted gross domestic product (GDP) — a measure of the value of all goods and services produced in the country — grew at a slower 7.3% during October to December from 7.4% in the previous three months.

The GDP growth estimates for January to March will be released on Tuesday along with the full year estimates.

In February, growth for the April-June quarter was marked up to 7.6% from a provisional 7% estimated earlier, surprising many analysts.

A Reuters survey of economists expected data out on Tuesday will show India’s gross domestic product grew 7.5% year-on-year between January and March, faster than the previous quarter’s 7.3%.

According to advance national income estimates, the manufacturing sector is estimated to grow at 9.5% from 5.5% in the previous year, although some experts say data from other sources such as household spendings, corporate earnings and tax collections and sales of goods and services are weak and do not point towards an industrial turnaround.

Factory output, measured by the index of Industrial Production (IIP), has grown 2.4% during April to March compared to 2.8% in 2014-15.

According to the IIP data, manufacturing sector grew by a tepid 2.0% in 2015-16 against 2.3% in the previous year.

Analysts will be keenly watching the national income data for the gross value added in manufacturing sector — a metric to measure factory output. According to the advanced estimates, it grew at an average of 9.63% ( at constant prices) during April to December, baffling analysts.

During the October-December quarter, according to national income data, the manufacturing sector had grown at 12%, widely divergent from the data shown by the monthly IIP numbers.

Analysts will also be keenly watching the national income data for pointers on investment activity.

According to the advanced estimates, after adjusting for inflation gross fixed capital formation (GFCF), a marker for new capacity additions by firms, will likely fall to 29.4% of GDP in 2015-16 from 30.8% in the previous year.

The latest GDP data will also show the impact of the two successive years of drought on farm income. A lot rides on this year’s monsoon rains to push growth across many sectors such as two-wheelers and consumer durables.