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India’s Economy Outpaces China
World Economy

India’s Economy Outpaces China

India’s economic growth picked up in July-September, outpacing China on improving domestic demand and manufacturing activity, and the acceleration could persuade the country’s central bank to keep interest rates unchanged at its Tuesday meeting.
The Reserve Bank of India is expected to hold rates steady after a sharper-than-expected 50 basis point cut at its last meeting, as it looks to control price rises ahead of a tighter 2016 inflation target, Reuters reported.
Asia’s third-largest economy expanded by a 7.4% annual rate in the second quarter of the 2015/16 financial year that ends in March, compared with 7% in April-June, the Statistics Ministry said on Monday.
China reported annual growth of 6.9% for the three months ended Sept. 30. A survey of analysts by Reuters had forecast Indian GDP growth of 7.3% for the July-September quarter.
Stronger growth would be a boost for Prime Minister Narendra Modi after a defeat in state elections in India’s third-most populous state of Bihar.
Modi is focusing on reforms to accelerate growth and hopes to convince his opponents to implement a much-delayed national sales tax in 2016.
“Growth is on a relatively stable path,” said Indranil Pan, chief economist at Mumbai-based IDFC Bank. “There will be enablers to improve growth through consumption and low interest rates in the economy.”
The economy is not firing on all cylinders, however, and, in the view of some analysts, growth has been driven more by public spending than private consumption.
In the second quarter, investments grew 6.8% from a year earlier, compared with 4.9% in April-June.
The government has front-loaded its budget spending, boosting investment in infrastructure to stimulate economic growth and complement private investment.

 

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