In Good News Ahead of Budget, GDP Growth Revised Upwards to 7.6%

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The government on Monday forecast annual economic growth to accelerate to 7.6 per cent in the fiscal year ending in March 2016 after Asia’s third-largest economy grew 7.3 per cent in the quarter to end-December.

The data shows that Indian economy is expanding at a faster pace than China, where GDP growth hit nearly seven-year low of 6.8 per cent growth in the December quarter.

However, there has been some moderation in growth vis-a-vis September quarter, when GDP growth hit 7.4 per cent.

The government had earlier revised its economic growth target to 7 to 7.5 per cent for the fiscal year that ends on March 31 from an earlier estimate of 8.1 to 8.5 per cent, due to weak farm output and declining exports.

Many economists say India’s GDP numbers have been bumped up by the statistical change adopted to calculate growth last year. They say that the pace of expansion of the economy as measured by new GDP numbers don’t match with other economic indicators like auto sales, power demand, and imports of capital goods.

The new data is a headache for Finance Minister Arun Jaitley, who faces tough choices in his February 29 budget over whether to hike borrowing and spending to compensate for the sluggish private sector spending, say economists.