GDP growth zooms to 5-year high of 7.6%

Tribune News Service

New Delhi, May 31

In a sign of recovery in growth momentum, the economy grew at an accelerated pace of 7.9% in the fourth quarter of financial year 2015-16, taking the overall GDP growth to a five-year high of 7.6% for the full year on the back of increased consumption although investment activity remains muted.

Data released today along with GDP numbers on national income showed that India’s per capital income rose by 7.4% to Rs 93,293 in 2015-16, compared to Rs 86,879 in the preceding fiscal.

In addition to better than expected Q4 GDP numbers, core sector data for April clocked a four-high with infrastructure sectors growing at an over four-year high rate of 8.5% in April, helped by double-digit expansion in refinery products and electricity generation.

Manufacturing and agriculture performed better in the fourth quarter. According to the data released by the Central Statistics Office (CSO), the manufacturing sector during the fourth quarter recorded a growth rate of 9.3% while the farm sector grew at 2.3%.

Analysts said the private consumption has been up and one of the reasons could be more dividends rather than investments by corporates. Upasna Bhardwaj, Economist, Kotak Mahindra Bank, said private consumption has been holding up mirroring some of the progress in high frequency data such as auto sales and the improving prospects of adequate monsoons.

“Another reason for the pickup in private consumption could be attributed to the heavy dividend payouts by corporates rather than increasing investment spending. Overall, the continued weakness in capital goods production and lack of capacity addition continues to remain a drag on growth”, she added.

Chandrajit Banerjee, DG, CII, said the impressive GDP print in the closing quarter of the last fiscal points to a revival of growth impulses which, going forward, would gather further momentum.