The Indian economy has regained its momentum, with the Central Statistical Office (CSO) reporting a GDP growth of 7.2% in the December quarter (Q3) of 2017-18—the fastest in five quarters. This recovery was sparked by a revival in investment demand, registering a growth of 12%.Based on Q3 GDP data, the full year’s growth has been revised upwards to 6.6%. If this GDP growth rate is realized, the size of the Indian economy is projected to grow to $2.6 trillion at the end of March. Not only does this signal that the Indian economy is tiding over the disruptions—triggered by demonetisation of high-value currencies and rollout of the goods and services tax—but the latest quarterly corporate earnings data suggest that consumer demand too is reviving. The finance ministry said in a statement that the robust growth in manufacturing and significant acceleration in construction mark a turnaround in the country’s economic growth momentum. But given that government spending has driven economic growth, the rising fiscal deficit numbers could prove to be a constraint.

(Live Mint)