GDP rises at two-and-half years high pace of 5.7% in Q1FY2015

Domestic investment demand exhibits strong growth of 7% in Q1 of FY2015

The Central Statistical Office (CSO) released quarterly estimates of India's Gross Domestic Product (GDP), showing surge in GDP growth to two-and-half years high of 5.7% in the quarter ended June 2014 of the fiscal year ending March 2015 (Q1FY2015) over corresponding quarter last year. GDP growth has shown sharp improvement from 4.6% in the previous quarter and 4.7% in the corresponding quarter last year.

An improvement in the GDP growth was facilitated by rebound in industrial sector growth, after two sequential quarters of decline. The agriculture sector has also continued to post healthy growth in output on the back of better Rabi season crop output. Meanwhile, the services sector also exhibited accelerated growth in output during Q1FY2015.

On the demand side, the improvement in net foreign demand continued to add to the GDP, while domestic private consumption and government consumption growth remained healthy in Q1FY2015. More importantly, the domestic investment demand has exhibited strong growth of 7% in Q1 of FY2015.

The growth of the agricultural sector remained healthy at 3.8% in Q1 of FY2015 compared to 4% in the corresponding quarter last year.

The growth in the industrial sector rebounded to 4.2% in Q1FY2015, snapping 0.2% fall in previous quarter and 0.4% dip in the corresponding quarter last year. The performance of the industrial sector was supported by surged in mining 2.1% and manufacturing 3.5% sector GDP. Further, the utilities 10.2% as well as construction 4.8% sectors recorded healthy growth boosting the industrial sector GDP growth in Q1 of FY2015.

Services sector witnessed higher growth of 6.8% in Q1 of FY2015 from 6.4% in the previous quarter ended March 2014. Within the services sector, the community, social & personal services' growth improved to 9.1%, while 'Financing, insurance, real estate & business services' growth posted healthy growth of 10.4% in Q1 of FY2015. Meanwhile, the 'trade, transport & communication' witnessed growth of 2.8% in the quarter ended June 2014.

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