According to the provisional estimates of national income, the growth rate of GDP at constant (2011-12) prices for the financial year 2017-18 was estimated at 6.7 percent, while, at the sectoral level, the growth rate of GVA at constant (2011-12) prices for agriculture and allied sectors, industry and services sectors for the year 2017-18 were estimated at 3.4 percent, 5.5 percent, and 7.9 percent respectively.
While that makes it one of the fastest-expanding major economies, the sustainability of the recovery is now in question as the nation battles a currency slump and faster inflation brought about by surging oil prices. Demand seemed to have picked up on the back of a concerted increase in government spending, from 10.3 per cent of GDP in 2016-17 to 10.8 per cent previous year at constant prices, perhaps largely on account of pay panel obligations. Healthy topline and bottomline growth in the corporate sector, as well as buoyant cement and steel output point to an upturn in the business cycle.
The growth rate for 2017-18 was higher than the government's first and second advance estimates - at 6.5% and 6.6% - and in sync with what the International Monetary Fund, the World Bank and the Economic Survey had estimated.
Backed by government spending and investment, the economy grew at a seven-quarter high of 7.7% in January-March.
Ranen Banerjee, Partner and Leader - Public Finance and Economics, at PwC India, said the high growth rate reported in quarter is on expected lines for us as the high frequency data on PMI and IIP as well as rural demand were all indicating a revival. He said, good growth in the fourth quarter has reflected in GDP numbers.
"Seems like we have moved beyond the teething troubles related to GST implementation", said Tushar Arora, a senior economist at HDFC Bank.
Viral Acharya, the deputy governor in charge of monetary policy, said last month he'll vote for a withdrawal in monetary accommodation in June.
The Indian government earlier this month sought assurances from Saudi Arabia, OPEC's biggest producer, that oil prices would remain "stable and moderate". This registered a growth of more than 14% YoY in Q4FY18, compared to negative growth YOY in the corresponding quarter a year back (Q4FY17). "We should however be wary of the headwinds the economy faces in the coming quarters from higher crude prices feeding into inflation and rising inflation expectations". The GVA growth was 7.1 per cent in 2016-17. For 2017-2018 it projected the economy to grow at 6.7 per cen.