India regained status of world's fastest growing major economy

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Fuelled by increasing consumer spending and higher manufacturing, the Indian economy has overtaken China yet again to become the world's fastest growing country with GDP growth rate touching 7.2% for the October-December quarter of this fiscal year.

According to government data, India's Gross Domestic Product or GDP 7.2 percent during the aforementioned quarter.

The figure raised hope that the disruptions from dramatic policy moves by Prime Minister Narendra Modi previous year may have faded. The construction sector grew by 6.8 percent in the third quarter.

Manufacturing GVA in the quarter under review grew at 8.9 percent, compared to 6.9 percent in the previous quarter. The investment bank also predicted that GDP grew by 7 percent on-year for the December quarter, a touch above the market consensus.

"We have added the risk of a rate hike sometime between June to August 2018 following the recent monetary policy minutes, hinging on the inflation trajectory, and the GDP numbers reinstate our views".

Modi is trying to accelerate growth through higher state spending, including Rs2.1 trillion ($32.36 billion) for recapitalisation of state banks, which are beset with mounting bad loans of almost $148 billion. "Global economic growth will turn higher and peak in 2018", said ratings agency Moody's on Wednesday. Significantly, heralding an improvement in the investment climate, real gross fixed capital formation is estimated to grow at a robust 7.6 per cent for 2017-18, accelerating from 6.9 per cent in second quarter to 12 percent in third quarter 2017-18, it added. That's faster than China's growth over the same period, and a big jump from the 6.5% India recorded the previous quarter.

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The downward revision underscored the modest result for GDP growth over all of 2017.

The growth in key sectors will have implications for the Index of Industrial Production (IIP) as these eight segments account for about 41 per cent of the total factory output.

Ahead of the data release, economists polled by Reuters had expressed concerns about the increase in non-performing assets (NPAs) of state-run banks, and said if they are not handled effectively it would hurt economic activity.

With the current growth figure, India Inc hopes that it will strengthen the position of county's growth in near future.

Estimated growth in the index of mining, manufacturing and electricity are 0.8%, 7.1% and 3.8% respectively, in Q3 of 2017-18.

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