What also helped Asia’s third largest economy power ahead amid the disruption in global energy markets was a strong acceleration in exports and a surge in private corporate investments, which has long been a point of great concern for economists.
Exports grew by a sharp 12% despite tariff uncertainties on the back of strong global demand and a weak exchange rate. Economists reckon a 15% slump in the Indian rupee against the US dollar may have helped companies improve their competitiveness, driving up demand for Indian goods.
Corporate India, meanwhile, seems to be finally putting money into new buildings and factories. India’s gross fixed capital formation, which serves as a core indicator of total domestic public and private investment rose, nearly 12% in the first three months of this year.
“Non-government data also points to the fact that investment intentions of companies have gone up in recent months, with announcements especially concentrated in industries like data centres, renewable energy and metals,” Madan Sabnavis, chief economist with the state-run Bank of Baroda, told the BBC.
“Of course, private investment is not broad-based yet, but these are definitely signs of a pick up.”
While the robust numbers pushed several private brokerages to revise their full year growth forecasts upwards, they also stirred up a roaring debate online and a war of words between politicians.
Opposition leaders like Jairam Ramesh , externalcalled the numbers “statistical gymnastics”, accusing the government of repeatedly tweaking methodology to conceal what he said was “India’s dire economic reality”.
A former finance secretary also raised serious doubts, saying the GDP got a pop because it was calculated on the basis of newly revised numbers and a lower base for the same period last year – a view the government strongly rebuffed, external, saying revisions are a part and parcel of GDP calculations.
The government’s view was supported by the World Bank’s executive director for the country, Neelkanth Mishra, who said the new GDP series “cleaned up the data and also significantly improved the methodology”, enhancing the credibility of the estimates.
But India’s new GDP series – a reworked way of measuring the size of the economy – has substantially revised down the estimated level of India’s GDP in previous years, automatically making current growth look much higher than it would have been without the revisions.
Beyond the statistical minutiae, others like the former central bank governor Raghuram Rajan have also questioned why if the growth indeed was so rapid was India not creating more jobs or attracting more foreign direct investment.
To make matters worse, the stock markets also largely shrugged off the positive news.
The debate has muddied the picture for authorities who will have hoped the numbers would help them counter growing criticism about the uneven nature of India’s growth trajectory.
